Regulators' foreclosure review expected in January
WASHINGTON (Reuters) - Bank regulators are expected in January to complete their review of foreclosure practices at large financial institutions.
Banks are accused of having used "robo-signers" to sign hundreds of foreclosure documents a day without proper review, a fiasco that reignited public anger with banks that received billions of dollars in taxpayer aid in the financial crisis.
Bank of America, Ally Financial and JPMorgan were among banks that temporarily suspended foreclosures pending internal reviews of their practices, but have since resumed sales of foreclosed properties.
The allegations have prompted civil and criminal probes at the state and federal level.
Regulators such as the Office of the Comptroller of the Currency (OCC) and the Federal Reserve are coordinating their reviews of lenders' foreclosure processes and are aiming to complete them early next year.
It is unclear whether regulators will publicly reveal the findings. Fed Chairman Ben Bernanke has said he hoped to have the preliminary results in November.
The OCC said regulators are assessing mortgage servicers' foreclosure policies and procedures and loan documentation, among other things.
"We also will test and validate the effectiveness of foreclosure governance and adequacy of the bank's self assessment including corrective actions taken or planned," the OCC said in a November 10 letter to Democratic lawmaker Alan Grayson.
The major lenders are facing further scrutiny from all 50 state attorneys general who are investigating their foreclosure practices. CNBC reported on Tuesday that the banks and attorneys general are nearing a settlement.
A settlement would call for Bank of America Corp, JPMorgan Chase & Co, Wells Fargo and others to contribute money to a fund to assist borrowers who lost their homes to foreclosure, and which would be administered by the regulators, CNBC said.
Some lawmakers also want the Financial Stability Oversight Council (FSOC), which is currently being set up to identify risks in the financial system, to probe the housing foreclosure mess and recommend solutions.
"I agree that this situation may warrant consideration by the FSOC," the OCC's acting comptroller, John Walsh, said in the letter.