Watchdog Panel to Grill Treasury on Foreclosure Robo-Signings

COP event marks first public hearing to include robo-signing questions.

ByABC News
October 26, 2010, 2:04 PM

Oct. 26, 2010 — -- A Treasury official will be on the hot seat tomorrow as a Congressional watchdog group, known largely for its scathing assessments of the federal bank bailout, will hold the first public hearing to tackle the foreclosure robo-signings scandal.

Tomorrow's hearing, by the Congressional Oversight Panel for the Troubled Asset Relief Program, was originally to focus on the government's foreclosure mitigation programs, including the Home Affordable Modification Program.

Now, COP spokesman Thomas Seay said, the panel will also hear testimony on how "robo-signed" affidavits -- foreclosure paperwork that allegedly was signed by employees who failed to properly review it -- could hurt the housing market and banks' bottom lines.

The panel will question Phyllis Caldwell, the Treasury Department's chief of the Homeownership Preservation Office, to learn how the administration is addressing the issue.

"Part of our mandate is to examine financial stability," Seay said. "As issues arise, we will adjust the work we're doing to incorporate them."

The Treasury Department did not immediately return a request for comment.

The robo-signing allegations are under investigation by state attorneys general, banking regulators and the administration's Financial Fraud Enforcement Task Force. The Department of Housing and Urban Development is also reviewing the issue as part of a broader investigation into whether mortgage servicers were complying with government mandates to offer loan modifications for mortgages backed by the Federal Housing Administration.

"[W]e remain committed to holding accountable any bank that has violated the law," White House Press Secretary Robert Gibbs said last week.

Concerns have been raised that the foreclosure paperwork scandal could further damage the long-ailing housing market. Federal Deposit Insurance Corp. Chairman Sheila Bair said this week that litigation resulting from the scandal could prolong "necessary and justified" foreclosures.

Foreclosure delays could stall the clearing of excess housing inventory that economists say is needed for the housing market to recover.