It’s appalling, but not surprising, to learn about the sloppy, maybe even fraudulent handling of foreclosures by some lenders so overwhelmed by the default avalanche that they didn’t properly verify what they were signing before booting people out of their homes.

The thought of potentially mistaken foreclosures is disturbing.

The seriousness of this issue was underscored last week when all 50 states’ attorneys general announced a multistate investigation into mortgage servicers’ foreclosure processes.

While some politicians have called for a nationwide moratorium on foreclosures pending further investigation, that seems likely to cause further damage to housing markets like ours. In turn, that could harm the nation’s fragile economy. Properties headed for foreclosure need to keep moving through the pipeline. The sooner they can get new owners, the quicker housing can recover.

Not by flawed means, however. Lenders must ensure, as they should have from the start, foreclosures are done by the book.

But that shouldn’t require a blanket moratorium. While some lenders, including Bank of America, have stopped foreclosure sales pending a review of their processes, not all lenders should be forced to follow suit.

A moratorium would temporarily reduce the number of distressed property sales, but that “would be kind of like a false reduction,” said Dave Woodland, senior vice president at Signet Mortgage in Bend. It would increase the shadow inventory of distressed homes yet to be repossessed and marketed and increase the number of homes that would presumably hit the market all at once later, he said. “I don’t think a delay is in our best interests.”

Nor does Gerard Mildner, associate professor of real estate finance at Portland State University.

A moratorium “would penalize banks who have done their due diligence and have properly inspected their loan documents as opposed to the ones that haven’t,” Mildner said.

Lenders who improperly processed documents should be punished. But as an Associated Press story said last week, “Analysts don’t expect many people who lost homes to foreclosure to recover them.” Instead, AGs could consider requiring banks to step up their loan modification processes to help more people avoid foreclosure, AP said.

To date, many struggling homeowners have found the loan modification process a joke. It’s interesting that some lenders rushed to get people in homes without proper financial scrutiny, then didn’t help homeowners modify loans they couldn’t afford are now being investigated on the back end for their foreclosures. It’s hard to feel sorry for them.

It’s unclear if the problems uncovered in states where foreclosures are handled judicially are prevalent in Oregon. But “if lenders are doing it in the judicial context, that causes a great deal of concern that would also be going on in the processes used in Oregon,” said Tony Green, Oregon AG’s Office spokesman.

As the office explained in a news release last week: Oregon is not a judicial foreclosure state, which means a court does not approve a lender’s decision to foreclose. Consequently, the affidavits that have come under fire in other states as being false are not used here. However, in 2009 the Legislature passed a bill requiring lenders to tell homeowners they have certain basic rights, including a right to request a loan modification and a right to meet with their lender before foreclosure can be initiated. It also requires the lender to file an affidavit in support of the foreclosure. This year, the Legislature strengthened those protections by requiring the affidavit be filed at least five days in advance and that the lender provide an explanation if the loan modification doesn’t qualify, among other things.

Green expects the AG’s Office to get more foreclosure complaints as people have “aha” moments hearing about this mess. He encourages those complaints to the AG’s hot line at 877-877-9392 or website, www.doj.state.or.us.

Lenders that erred should pay for their mistakes, but a blanket moratorium that jeopardizes the entire housing market doesn’t seem to be a wise response.