Regulators are likely to discover more problems related to loan servicing by some of the biggest banks as they probe claims that documents were mishandled, Federal Deposit Insurance Corp. Chairman Sheila Bair said.More issues than originally thought: If anyone should know it's the head of the FDIC who's on the front line of examining and closing down banks.
“We are going to get into more and more problems with the issues that are surfacing now on servicing,” Bair said today at a housing conference in Arlington, Virginia. Resulting litigation could “ultimately be very damaging to our housing markets if it ends up prolonging those foreclosures that are necessary and justified,” she said. Bair didn’t provide details on what other problems she thought might arise.
The FDIC, the Federal Reserve and the Office of the Comptroller of the Currency are conducting joint examinations, with teams inside the firms responsible for handling mortgage payments from homeowners. Results of those exams will determine the federal government’s next steps, Bair said.
“Ultimately this problem will require some type of global solution,” she said. “In developing that solution, I would suggest that all interested parties consider some type of triage on foreclosures” such as safe harbor relief for vacant properties or interest-rate reductions for borrowers.
Damaging to our housing markets if it ends up prolonging those foreclosures: Without a doubt, it's only going to intensify the negative impact on the real estate "if" it creates a cloud over the entire market.
Global Solution: Most definitely. The issues are too big and deeply rooted in the entire industry to continue to look at each loan one at a time, not to mention a potential cycle of legal actions dragging this out. A global solution is the only answer.
I love when someone smart talks with common sense. Kudos to Sheila.
Hope all is well.
J.D Rosendahl, Rosey