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BILL RADKE: You’ve probably heard the accusations: Banks have been improperly foreclosing on properties and evicting the owners. Now the Justice Department is looking into the charges. Ally Financial, JPMorgan Chase and Bank of America have halted foreclosures in 23 states, while they try to figure out whether the legal paperwork is actually legal.
We asked Marketplace’s Alisa Roth what that freeze could do to the real estate market.
ALISA ROTH: Clifford Roe is a real estate broker on the Gulf Coast of Florida. Florida is one of the 23 states where some banks have suspended foreclosures. Almost all of his business is selling properties that banks have repossessed. He says he’s doing a quarter of the business he used to.
CLIFFORD ROE: The banks have just said whoa, stop can’t close it. They’re pulling them at the closing table. Or they’re calling us up and saying we’re not going to close. So they’re just disappearing.
Roe says he still has customers who want to buy foreclosed houses. But he has to warn them.
ROE: I tell ’em that, you know, this property as far as we know we can sell it, but that could change tomorrow, so understand that.
Just to be clear, this is a pause. Most of these foreclosures will probably stick. But it could take months to sort that out.
Chris Mayer is a real estate professor at Columbia’s Business School.
CHRIS MAYER: Homebuyers are going to be worried, maybe I should wait six months until the foreclosures come back in the market.
And all that uncertainty will probably delay the economic recovery even more. Because the real estate market is such an important part of it.
I’m Alisa Roth for Marketplace.
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