Economy Watch: Nationwide Foreclosure Freeze on the Horizon?

Will all bank foreclosures be stopped, as opposed to some? That question, pretty much unthinkable a month ago, now has a life of its own.

October 11, 2010
By Dees Stribling, Contributing Editor

Courtesy Flickr Creative Commons user pnwra

On Friday, Bank of America halted residential foreclosure evictions in every state, pending the time when the lender figures out how to evict defaulting borrowers with all the paperwork done correctly (including being sure the bank actually owns the mortgage). Will all bank foreclosures be stopped, as opposed to some? That question, pretty much unthinkable a month ago, now has a life of its own.

Bankers are trying to characterize the problem as technical in nature. “What we’re trying to do is clear the air and say we’ll go back and check our work one more time,” Bank of America CEO Brian Moynihan told the National Press Club on Friday, who added that he’s sure that the whole thing isn’t such a big deal.

Not everyone is so sure about that, and the number of officials and commentators calling for a nationwide freeze on foreclosures grows every day, including state attorneys general–a group of 40 will announce plans for a joint investigation into the matter this week–an assortment of governors, and various members of Congress (including the hard-pressed Sen. Harry Reid (D.-Nev.).

The Obama administration has not, however, pressed for a complete moratorium. On Sunday, senior White House adviser David Axelrod told Face the Nation that “our hope is that this moves rapidly and that this gets unwound very, very quickly.”

September a Mediocre Month for Hiring

The headline unemployment numbers from the U.S. Bureau of Labor Statistics for September, which were released on Friday, put the month’s job losses at 95,000, many of which were government jobs of one kind of another. The decennial census continues to wind down, but more worryingly, local government labor forces are contracting as local government revenues remain stagnant or worse.

Still, the private sector had a net gain in jobs for the month, though not a particularly robust gain. Private hiring added 64,000 jobs, a little less than in July and August, but better than in May and June. What the economy needs, however, is a run of months like April 2010, when the private sector added nearly a quarter-million jobs.

Construction continues to be a job loser, shedding 21,000 positions during September. By contrast, leisure and hospitality–which is making something of a rebound as a sector–added some 38,000 jobs. Even retail eked out some gains during the month, with a net increase of 5,700 jobs.

Masdar City Delayed

The $22 billion development of Masdar in Abu Dhabi, touted back in 2006 as the world’s first carbon-neutral master-planned city, has been delayed by the Abu Dhabi Future Energy Co., or Masdar, a subsidiary of Abu Dhabi government-owned Mubadala Development Corp. Originally slated for completion in 2013, the first phase of the development is being pushed by to 2015 because of “market and technology developments,” the company said.

In other words, the bum economy has slowed down leasing even for oil-rich emirates, just as it has for more conventional CRE developments worldwide. The Masdar development, which will combined residential and industrial uses, was also to be completely powered completely by on-site renewable energy sources, but now the company says that some energy will be purchased from off-site renewable sources.

Wall Street had an up day on Friday, with the Dow Jones Industrial Average breaking the 11,000 mark for the first time since investors were spooked by the prospect of Greece defaulting on its sovereign debt last spring. The Dow gained 57.9 points on Friday, or 0.53 percent, while the S&P 500 climbed 0.61 percent and the Nasdaq advanced 0.77 percent.