Just as the Obamacare disaster and Euromess show, elected officials make laws without considering the "unintended consequences" which will follow. In the case of anti-foreclosure laws, those states that went down that path now find themselves with lagging real estate markets:
Insight: Evidence suggests anti-foreclosure laws may backfire - Terra USA: " . . . Yet comparisons with nearby Arizona and other states with few barriers to foreclosure suggest that homeowner protection laws can delay a market recovery.
At the request of Reuters, RealtyTrac compared three states where borrower protection laws had prolonged foreclosures - Florida, New Jersey and New York - with three with fewer protections and where foreclosure completion times were shorter - Arizona, California and Virginia.
In the three states with the shorter delays, the average sale price for foreclosed properties has been trending higher, suggesting a recovery that has underlying strength.
In Florida and New Jersey, home prices rose last year as foreclosure activity greatly slowed after the robo-signing scandal. But in the last few months, RealtyTrac says, foreclosure activity has picked up there after a settlement between major banks and the U.S. government over robo-signing - and home values have started to drop.
RealtyTrac Vice President Daren Blomquist says the data shows that delaying the foreclosure process in Florida and New Jersey created a mini-bubble, followed by another price drop, and had thus merely prolonged the housing slump in those states. . . ."
It would have been better if the government in those "anti-foreclosure" states had done nothing. Instead they made a bad problem worse. So much for the theory that we need more laws!
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Thursday, July 12, 2012
Anti-foreclosure Laws and Unintended Consequences
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