Foreclosure System in Chaos—Which Might Be Good

It could eventually help housing prices stabilize
By John Johnson,  Newser Staff
Posted Oct 1, 2010 12:11 PM CDT
A foreclosure sign is posted outside a home in Los Angeles.   (AP)
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(Newser) – The nation's foreclosure system is coming to a virtual standstill in the wake of news that two big home lenders may have done shoddy work processing them. The New York Times weighs in on the mess and finds a silver lining: This could actually help the housing market in the long term. One of the reasons home sales are weak is due to fears that a glut of foreclosed homes will come on the market. If those foreclosures never happen, prices could finally stabilize.

“Maybe this is like shock therapy,” one economist tells the Times. "Maybe this will actually get the lenders to the table and encourage them to work out deals that are to the benefit of everybody.” In the interim, however, the system is in chaos. For instance: Some of those who have been foreclosed upon recently are looking into legal challenges, which won't be fun for the new occupants of their houses.

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