–Preliminary Results From Review of Servicers Practices Due Next month
By Yali N’Diaye
WASHINGTON (MNI) – Bank regulators are currently evaluating the
impact of foreclosure irregularities on the housing market and on
financial institutions, Federal Reserve Bank Chairman Ben Bernanke said
Monday.
Federal agencies are taking the issue of foreclosure irregularities
seriously, and are conducting a review of practices at the largest
servicers to identify the existence of “systematic weaknesses,” he said
in prepared remarks to a joint Federal Deposit Insurance Corp./Federal
Reserve symposium on Mortgages and the Future of Housing Finance.
Bernanke said he expects preliminary results of this review to be
released next month.
“I would like to note that we have been concerned about reported
irregularities in foreclosure practices at a number of large financial
institutions,” said the Fed chairman, who made no reference to monetary
policy and took no questions from the audience.
“The federal banking agencies are working together to complete an
in-depth review of practices at the largest mortgage servicing
operations,” he continued.
“In addition, Federal Reserve staff members and their counterparts
at other federal agencies are evaluating the potential effects of these
problems on the real estate market and financial institutions,” he said.
His remarks were made after a raft of lawsuits by homeowners
against mortgage servicers brought to light widespread flaws in
foreclosure practices. Banks with securitized mortgage loans are also
facing lawsuits from investors seeking to force buy backs of
non-performing loans.
The foreclosures debacle have led the largest institutions to
suspend, then restart, foreclosures nationwide — raising hopes of a
foreclosure moratorium.
The Obama administration made it clear last week, however, that
there will be no foreclosure moratorium and the government will not get
involved in the lawsuits initiated by a large group of investors,
including the New York Federal Reserve Bank.
Still, Bernanke said the foreclosure irregularities are a serious
issue, and so, “We are looking intensively at the firms policies,
procedures, and internal controls related to foreclosures and seeking to
determine whether systematic weaknesses are leading to improper
foreclosures.”
He added, “We take violations of proper procedures seriously.”
** Market News International Washington Bureau: 202-371-2121 **
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