In this op-ed Blackrock’s Barbara Novick explains why a Foreclosure Moratorium is a bad idea.

Attorneys general from all 50 states launched a joint investigation last week into allegations that mortgage-servicing companies submitted fraudulent documents and broke laws in foreclosure proceedings. Some lawmakers are calling for a national moratorium on foreclosures. In response, major mortgage servicers—including Ally Bank, Chase, Bank of America and PNC Financial Services—have announced a freeze on all foreclosures until internal investigations are completed.

While any fraudulent activity should of course be addressed, a comprehensive moratorium on all foreclosures will do more harm than good. For starters, it won’t address the underlying issue—that thousands of homeowners can’t make their mortgage payments. Postponing the resolution of these debts will actually prevent consumers from extricating themselves from loans they can’t afford. Worse, a national foreclosure moratorium will exacerbate the housing-market crisis by increasing uncertainty and preventing supply and demand from reaching equilibrium.

For the complete op-ed, please click here: WSJ_Blackrock_oped_18OCT2010