A national, blanket moratorium on foreclosures would do more harm than good, but the Obama administration "will respond with the full force of the law" when problems in loan servicers' foreclosure procedures are found, Secretary of Housing Shaun Donovan said today in spelling out the administration's approach to the robo-signing controversy.
Issues raised by "robo-signing" -- in which employees for loan servicers have admitted to signing court affidavits in foreclosure filings without personal knowledge of what was in the documents -- are "priority number one" for a Financial Fraud Enforcement Task Force formed last year to coordinate actions by federal and state law enforcement agencies, Donovan said in a blog post.
In addition, the Federal Housing Administration and Federal Housing Finance Agency have launched reviews to make sure servicers are in full compliance with the law, and the Office of the Comptroller of the Currency has directed seven of the nation's largest servicers to review their foreclosure processes and fix any problems, Donovan said.
"The message all these institutions are sending is the same: banks must follow the law -- and those that haven't should immediately fix what is wrong," Donovan said.
At least six loan servicers -- Bank of America, Wells Fargo, GMAC Mortgage, JP Morgan Chase, PNC Financial Services Group Inc. and Litton Loan Servicing -- are reviewing their procedures and filings in 23 states where courts have jurisdiction over the foreclosure process, and some have voluntarily suspended or curtailed foreclosure proceedings in those states.