Federal Deposit Insurance Corp. chairman Sheila Bair said she has concerns about foreclosure processing problems plaguing the banking industry, in particular how it may affect loss-sharing arrangements entered into by the agency.
However, speaking before the Securities Industry and Financial Markets Association meeting in New York, she noted that the FDIC is not the "primary" regulator in the matter. That authority, she said, belongs to the states.
She also warned that foreclosure problems may go beyond the initial affidavit-related concerns. Bair said that while not all information is in from the file-level reviews being conducted by servicers, it looks like there could be title transfer concerns.
She also worries about loan modifications being consistent with the rules in cases where Home Affordable Modification Program servicers are involved.
While the FDIC is not the primary regulator in charge of foreclosure oversight, the agency chief suggested that in handling the crisis, states should not slow the foreclosure process down much. "The market does, at some point, have to clear," she said.
Bair suggested that this could be addressed by a "safe harbor" for servicers that can meet certain standards showing they made a "meaningful effort" to restructure loans in question. States AGs, she said, may be thinking along these lines.
