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Axelrod signals White House opposition to foreclosure moratorium

By Tom Cohen, CNN
  • NEW: House Democrat backs a nationwide freeze on foreclosures
  • Obama's senior adviser calls for quick action on the issue
  • Axelrod responds to calls for a halt to all foreclosures
  • At least 3 mortgage providers have curtailed foreclosures so far

Washington (CNN) -- The Obama administration opposes a moratorium on home foreclosures, but wants problems involving improper paperwork resolved as quickly as possible, senior adviser David Axelrod said Sunday.

"I'm not sure about a national moratorium," Axelrod said on the CBS program "Face the Nation." He said valid foreclosures with proper paperwork should go forward, and that questionable foreclosures need to be addressed right away.

"Our hope is that this moves rapidly and that this gets unwound very, very quickly," Axelrod said.

On Friday, Bank of America announced it was halting foreclosure sales in all 50 states as part of a widening investigation into flaws in the process. The announcement came a week after the nation's largest bank said it was freezing home foreclosures in 23 states where foreclosures must be approved by the courts.

Ally Financial, previously known as GMAC, the finance arm of General Motors, has also paused foreclosures in the 23 states, and JPMorgan Chase announced last week that it will also halt proceedings for about 56,000 homeowners after learning that its employees may have approved foreclosures without personally reviewing loan files.

State attorneys general have stepped up pressure on banks after it was revealed that some bank employees had signed foreclosure affidavits without verifying that the documents were accurate, a process now known as "robo-signing."

Ohio's attorney general has filed a lawsuit against Ally Financial and its subsidiary GMAC Mortgage for allegedly submitting fraudulent documents in hundreds of foreclosure cases across the state.

Senate Majority Leader Harry Reid, D-Nevada, called on major mortgage servicers to consider halting foreclosures in all 50 states in a statement released Friday.

"It is only fair to Nevada homeowners to suspend foreclosures until a thorough review of foreclosure processes is completed and homeowners can be assured that their documents are being analyzed properly," Reid said.

On Sunday, Democratic Rep. Debbie Wasserman Schultz of Florida echoed Reid's call, telling "FOX News Sunday" that halting foreclosures should be accompanied by efforts to get the problem fixed.

"I think we need a combination of a freeze, potentially, and also we need to sit down with the banking industry and talk to them about ways in which we can help them be able to work those mortgages out, because it's absolutely imperative that we keep people in their homes," Wasserman Schultz said.

On the same program, Republican Rep. Eric Cantor of Virginia warned that freezing the foreclosure process would bring greater harm to an already crippled housing industry.

"If you impose a moratorium on foreclosures, what you're telling people and institutions that lend money is they do not have the protection to take the risk they need to, to extend credit so people can get a mortgage," Cantor said. "You're going to shut down the housing industry if that's the case."

Asked about a solution, Cantor replied: "People have to take responsibility for themselves. We need to get the housing industry going again. We don't need government intervening in every step."

Sen. Christopher Dodd, D-Connecticut and the chairman of the Senate Banking Committee, announced Friday that he will hold a hearing to investigate allegations of improper mortgage servicing and foreclosure processing on November 16, the day after the Senate returns from recess for the congressional elections.

On Thursday, the White House said that President Barack Obama won't sign a bill that could have made it easier for courts to clear foreclosures. The bill would have required federal and state courts to recognize documents that were notarized in other states.

CNNMoney's Charles Riley contributed to this report.