1:39 PM
By Dave Clarke and Corbett B. Daly
WASHINGTON | Thu Nov 18, 2010 3:53pm EST
WASHINGTON (Reuters) - Lawmakers hauled the top U.S. mortgage lenders and their regulators to Capitol Hill on Thursday to chastise them for widespread flaws in foreclosure documents, but failed to extract any promises of fines or fresh loan modification programs.
Major banks admitted to sloppy documentation to a House of Representatives' subcommittee but said they had taken steps to tighten procedures and that the basis of their foreclosures has been accurate.
Federal regulators said they learned of the problems from news reports but are now actively reviewing banks' work and plan to issue their findings in January.
It was the second congressional hearing this week into revelations that lenders used "robo-signers" to sign hundreds of foreclosure documents a day, without proper legal reviews.
"I want to know, given the problems in the mortgage servicing industry -- problems which have been apparent for years -- what are government and industry witnesses intend to do to fix these problems and why any of them should keep their jobs," Maxine Waters, who chairs the House Financial Services housing subcommittee, said at the outset of the hearing.
Lawmakers threw most of their best jabs at regulators, who testified first, while a panel with bank executives, who were sworn in as witnesses by Waters, was sparsely attended.
Officials from the Federal Reserve and other bank regulators appeared ahead of executives from Bank of America, JPMorgan Chase, Wells Fargo, Citigroup, and Ally Financial.
The U.S. housing industry remains in a multi-year slump that followed years of easy lending; a collapse that precipitated the recent financial crisis and the worst economic downturn since the 1930s.
Banks have now repossessed just over three million homes through October since January of 2007, according to real estate data firm RealtyTrac.
MULTIPLE PROBES
Mortgage servicing and foreclosure practices are being investigated by both federal officials and all 50 state attorneys general.
John Walsh, acting comptroller of the currency, said the problems were isolated at specific institutions, rather than a widespread industry issue. "I am not aware of a reason to believe there is a systemic failing of the system," he said.
The paperwork fiasco has reignited public anger with banks that received billions of dollars in taxpayer aid during the financial crisis.
Waters repeatedly questioned whether regulators had gone far enough in their penalties and oversight. "Why should take you seriously?" she asked.
Walsh said examiners were focused on monitoring banks' mortgage modification programs, rather than keeping a close watch on how they processed foreclosures.
Posts
