The Question No One’s Asking

Whether you are for or against the latest executive action coming out of the administration, what no one, especially the mainstream business/financial media, is asking is the following…

If there is now a mandated moratorium in regards to evictions – does that now imply that those with federally backed mortgages are now being put at even more risk from the banks holding those notes to foreclose on them after this period, because they in-turn may not be able to make up (if ever!) their payments after this is over?

And in doing so – does that allow the banks (or any other entity) the ability to then hold onto said foreclosed properties – and allow the government to put in subsidized renters? Or, even more draconian, the homeless? All the while these “impaired” properties are allowed to remain at full value as to not effect their (e.g., banks) balance sheets?

Think it can’t happen? May I remind you of California or New York mandating hotels to provide rooms to the homeless during this crisis? Or the great no longer need to “mark-to-market” clause that allowed banks to hold impaired (think -worthless) properties on the balance sheets at 100% value?

From a political standpoint this may be a very well played tactical maneuver. i.e., Make your political opponent call for its reversal during a crisis before an election. Things like this have been done at both an increasing, as well as alarming, fashion for years by both parties. (think – “Let the courts decide!” legislation we’ve all been forced to accept, rather than what we voted for, that has been the go-to model of politics lately.)

Again, regardless whether you’re for it, or against it. If it holds up, or is voted for in some type of compromise agreement: What does this now do to the idea and precedents we attribute that holds justifiable, and enforceable for means of redress, everything we now take as “written in stone” when it comes to contract law?

We may have been able (although I believe it to be doubtful, at best ) or have been figuratively allowed to keep some semblance of what remained for argument regarding contract law, foreclosures, etc., etc., before this. But this action will all but surely not just hinder, but quite possibly, smash any and all accepted rules of law (e.g., contracts et.al.) as possibly null and void. After-all, how can a business or landlord of any type be held in foreclosure for non-payment if the government mandated that its tenants did not have to pay?

Perplexing questions with far more ominous possibilities than most may contemplate.

And for those wondering why the mainstream business/financial media aren’t asking any of the above? Here’s a hint…

They don’t have a clue

© 2020 Mark St.Cyr