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2010-12-03 10:01:18

Pressure on Regulators for Better Policing of Foreclosures

US regulators are under pressure to explain to law makers how they are policing procedures of foreclosures even as a hue and cry has emerged that lenders evicted homeowners wrongfully on the basis of careless paper work.

A hearing on the problems of the mortgage industry has been set up by the Senate Banking committee, which will also determine the overall impact of the crisis on the economy.

The housing market crisis has deepened with the robo-signing controversy where employees of lenders have signed away thousands of foreclosure documents without reviewing facts of each case.

Criticism has mounted against regulators for not detecting the much practiced flaws in foreclosures procedures. There is much public anger against banks which got billions of dollars of taxpayer money as bail out to survive the economic recession.

Meanwhile, federal regulators and a team of 50 state attorney generals are investigating procedures of leading mortgage servicers who had ordered a temporary freeze on foreclosures, but resumed them within a short time.

Regulators include chairperson of Federal Deposit Insurance Corp, Sheila Blair, and governor of Federal Reserve, Daniel Tarullo. They are anticipated to give an update on the investigation and determine the impact of the robo-signing scandal on the recovery of the housing market.

Also appearing at the meeting will be Freddie Mac and Fannie Mae, the giant mortgage servicing companies. They will be questioned on why they resumed foreclosures recently. As a member of the Senate Banking committee put it, they would like to know how the giants have corrected policies that do not allow rubber stamping and flaws in foreclosures procedures.

The main action regarding the foreclosures crisis is being played out in the states with attorney generals investigating the matter. Officials of major lenders have expressed their desire to come to a settlement with states. But a deal has proved elusive, and seems unlikely for more months.

The team of attorney generals is meeting in Florida this week to conduct its winter meeting. Guests include President Barack Obama and his top adviser on consumer issues, Elizabeth Warren.

Warren was also scheduled this week to hear where the probe stands and alert state officials on the situation regarding the setting up of the fresh Consumer Financial Protection Bureau.

Law makers and attorneys general have in particular attacked the Dual Track practice. This consists of mortgage servicers resuming foreclosures action even as they probe possible loan modification. But executives with lenders defended the practice saying that the procedure was required because of the long time frame of process of foreclosures, and also borrowers are not open to foreclosure alternatives.

Original post: on, your source of foreclosure homes.

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