• 25
  • October
    2010

It was reported on this blog that the major lenders began processing some foreclosures again last week after a temporary moratorium. Even as many of the nation's largest banks have resumed processing foreclosures, attorneys general in all 50 states have opened a joint investigation into how lenders processed documents during the foreclosure crises to find whether any homes were foreclosed upon in error or whether there was any evidence of fraud in processing foreclosures.

Today, Federal Reserve Chairman Ben S. Bernanke announced that federal banking regulators will also begin a review of banks' foreclosure policies and practices to investigate whether there are widespread "systematic weaknesses" in the foreclosure process that may be leading to "improper foreclosures."

Agencies investigating banking practices and shoddy or unacceptable foreclosure documents include the Department of Housing and Urban Development (HUD), the Treasury Department and the Justice Department.

According to the Los Angeles Times, Bernanke said that at this point in the foreclosure crises, "more than 20 percent of borrowers owe more than their home is worth and an additional 33 percent have equity cushions of 10 percent or less." He said that these troublesome numbers mean that if housing prices continue to decline another round of homeowners could be at risk of losing their homes. Bernanke said that there is a good chance of this occurring because of the continued weak state of the housing markets.

Source:

Bernanke says banking regulators are investigating foreclosure practices (Los Angeles Times)