Foreclosure Freeze Best-Case Scenario

Gregor Watson, a principal with McKinley Partners, a development company that buys foreclosed homes, told listeners on a Citi home-builder conference call that there were three potential outcomes from the foreclosure fiasco:

Best case: These are technical issues that can be resolved quickly so the foreclosure process can continue and the glut of foreclosed homes is cleared from the market.

Medium case: There is significant litigation that takes years to sort out and this slows the troubled housing market even further.

Worst case: The market grinds to a halt and title insurers refuse to insure mortgages involving foreclosed homes. “It would be devastating for the resale market if this robo-signer issue spiraled out of control,” Watson says.

Source: The Wall Street Journal, Dawn Wotapka (10/12/2010)

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