Los Angeles 10/21/2010 5:27:06 PM
News / Politics

Foreclosure Probe Underway: No ‘Systemic’ Problems Yet

A federal investigation into five of the nation’s largest mortgage lenders has turned up a number of improper foreclosures, but has reported that no systemic or ‘structural’ problems with foreclosure processing have been uncovered as of yet.

Shaun Donovan, the Secretary of the Housing and Urban Development department has said the agency, which is conducting the 5-month probe, was aware of problems for several months prior to the probe being launched and will "take actions" against firms found to have been using malpractice in foreclosure processing, and will also ensure that homeowners are protected.

Donovan has declined to give the specifics of which lenders are currently turning up bad processing records.

The Obama administration has had to walk a fine line on the issue, as many banks have voluntarily halted foreclosure proceedings. While the White House has called for a review, it has stopped short of actually issuing a moratorium on foreclosures. Donovan said Obama’s decision not to impose a nation-wide moratorium has been vindicated by the lack of systemic problems being found by the probe.

"This is getting the highest attention from the president and the White House," Donovan commented. "But we do have concerns that . . .stopping the sale of foreclosed properties has the potential to impact local housing markets."

So far all 50 states have launched investigations into whether banks, courts and processors have improperly foreclosed thousands of homes across the nation. Several banks, Including JP Morgan Chase and Bank of America have launched voluntary internal investigations.