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White House warns banks over foreclosures
October 19, 2010 / 2:51 PM / 7 years ago

White House warns banks over foreclosures

WASHINGTON, Oct 19 (Reuters Legal) - The White House warned banks on Tuesday it would pursue them for any mortgage practices that violated the law, piling pressure on the financial sector after two institutions lifted their freezes on home foreclosures.

<p>An auction sign for a property is seen at the front garden of a foreclosed house in Miami Gardens, Florida in this September 15, 2009 file photo. REUTERS/Carlos Barria/Files</p>

Bank of America said on Monday it was partially lifting its foreclosure suspension, and GMAC Mortgage, one of the largest servicers of U.S. residential loans, followed suit.

The moves followed two weeks of damaging accusations that financial institutions’ use of shoddy paperwork caused some borrowers to be illegally evicted from their homes.

The controversy, which has drawn public outrage and sparked government probes, has raised new fears about threats to bank earnings and the health of the fragile housing market, which has been battered by falling prices and foreclosures of nearly 3 million homes since January 2007.

The White House has rejected calls for a nationwide moratorium on foreclosures, but it signaled on Tuesday that even as banks lift their freezes, government investigations would proceed.

“As institutions are determining their next steps in addressing these issues, we remain committed to holding accountable any bank that has violated the law,” White House spokesman Robert Gibbs said in a statement.

“In addition to strongly supporting the investigation by the state attorneys general, the administration’s Federal Housing Administration and Financial Fraud Enforcement Task Force have undertaken their own regulatory and enforcement investigation into the foreclosure process.” (Reporting by Jeff Mason and Ross Colvin)

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