Bank of America foreclosure freeze: how will it affect the housing market?

A pre-foreclosure sign is seen in front of a home in Miami, Florida.

Bank of America announced Friday that they would temporarily freeze foreclosures in all 50 states as they review the fine print in what has become a Byzantine mess of poorly executed paperwork. The number of borrowers who are currently facing foreclosure or in default has dropped from a peak earlier this year, but remains high – there were 4.4 million in August alone. If housing prices slip into another decline the situation could worsen and neither government nor mortgage lenders seem to have an answer to the ongoing mortgage crisis. When will the mortgage crisis end? What ripple effects will BofA’s decision have on the housing market?

Bank of America announced Friday that they would temporarily freeze foreclosures in all 50 states as they review the fine print in what has become a Byzantine mess of poorly executed paperwork. The number of borrowers who are currently facing foreclosure or in default has dropped from a peak earlier this year, but remains high – there were 4.4 million in August alone. If housing prices slip into another decline the situation could worsen and neither government nor mortgage lenders seem to have an answer to the ongoing mortgage crisis. When will the mortgage crisis end? What ripple effects will BofA’s decision have on the housing market?

Guest:

Thomas Davidoff, assistant professor in the Sauder School of Business at the University of British Columbia