A national moratorium on foreclosures would have a negative or minimal effect on the housing crisis according to 65% of the property agents, brokers, hedge fund managers and construction industry professionals questioned by National Asset Direct.
'Moratoriums without a plan to help needy homeowners will only create a bigger problem. Lenders with minimal loan qualification criteria and irresponsible borrowers created this mess,' said one respondent.
'Credit debt and unemployment rates keep increasing, with a weak economy this is only an immediate incentive destined to become another artificial solution,” said another, while a vast number of respondents said that a moratorium would only slow down any recovery and drive up costs.
A similar percentage of industry insiders said that state-level foreclosure moratoriums were an equally bad idea, with 70% suggesting that states looking to lengthen or halt the foreclosure process would end up merely delaying the inevitable.
Only 5.5% of those surveyed were strongly in favour of state legislation to halt foreclosures.
There is a slot going on at present at a national and state level in the US. California governor Arnold Schwarzenegger has proposed a 90-day statewide moratorium on foreclosures, and Florida's governor said this week he is encouraging lenders in the state to adopt a 45-day moratorium to find workout options for troubled borrowers.
Economists at the Federal Reserve Bank of St Louis have warned against the use of foreclosure moratoriums. 'Although the economic and societal benefits of lower foreclosure rates are difficult to measure research shows that the foreclosure moratoria of the Great Depression imposed costs on future borrowers,' said economist David Wheelock.