As a result of the many foreclosures in the residential housing market at the peak of the financial crisis in 2008, state and federal laws were enacted to protect homeowners from eviction.
According to Reuters, having too many properties that banks want to foreclose on, but don't, hurts the entire community. It can hold back a sustainable recovery in prices and may also lead to the defaulting borrower having less incentive to keep the condition of their home, pulling down the value of their neighbors homes.
"Folks with negative equity can't sell their home and are less likely to invest in improvements or repairs, or pay their property taxes," Sean O'Tooles, CEO of ForeclosureRadar.com, told the news source.
Writing for the San Francisco Chronicle, John B. Taylor, professor of economics at Stanford and Douglas Holtz-Eakin, president of the American Action Forum, say that it is necessary to clear the excess housing inventory off the market as quickly as possible, and anti-foreclosure laws are preventing this from happening.
Such laws keep being enacted, as California recently passed one of the nation's strongest anti-foreclosure laws with its Homeowners Bill of Rights.