Obama Administration Concerned about Foreclosure Fraud, but Review Shows No Systemic Problems So Far

By Jared

Oct 20, 2010 4:19pm

ABC News’ Karen Travers & Matthew Jaffe report:

Secretary of Housing and Urban Development Shaun Donovan told ABC News today that the administration’s ongoing review of foreclosure documentation problems has raised “concerns” about some specific mortgage lenders and banks not following the rules, but there do not appear to be any “underlying systemic problems.”

Donovan declined to say which specific servicers have broken the rules, citing the ongoing review. That review will last until the end of the year, but Donovan stressed repeatedly that the administration wants it wrapped up quickly.

“The faster and more effectively we can do that, the more confidence we can give homeowners and the more confidence we can give the markets,” he said.

Donovan said Americans should understand that the Obama Administration has sent a very clear message to the mortgage lenders who have not followed procedures.

“At the end of the day we have to make sure that those institutions are held accountable,” he told ABC News.

This morning federal regulators, including Donovan, met in Washington to tackle the foreclosure fraud issue. The meeting, at the Department of Housing & Urban Development, was also attended by Treasury Secretary Tim Geithner, SEC chair Mary Schapiro, FDIC boss Sheila Bair, and a slew of other regulators from such agencies as the Federal Reserve, the Justice Department, and elsewhere.

In recent weeks the foreclosure crisis has once again erupted as numerous banks became embroiled in charges that they had initiated foreclosures based on fraudulent documentation. A handful of banks froze foreclosure proceedings, but now some banks such as Bank of America and GMAC Mortgage have ended their suspensions.

The Financial Fraud Enforcement Task Force has been looking into the issue, reportedly probing whether financial firms have committed criminal violations. A spokesperson for the task force would neither confirm nor deny a criminal investigation. But there is a growing outcry on Capitol Hill for the administration to crack down on the banks.

“It’s clear that if the rule of law means anything, it’s time for handcuffs,” Rep. Alan Grayson, D-Fla., said in a statement.

–Karen Travers & Matthew Jaffe

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