All four federal bank regulatory agencies are conducting targeted exams of foreclosure practices and policies involving on-site examinations and the sampling of loan files at depositories that control a large portion of the nation's $9.9 trillion in housing receivables.
The joint investigations being conducted by the Federal Deposit Insurance Corp., Federal Reserve, the Office of the Comptroller of the Currency, and Office of Thrift Supervision were revealed in prepared testimony from Fed governor Elizabeth Duke, who is scheduled to testify before a House subcommittee late Thursday morning.
Also, the Federal Housing Administration is surveying its largest servicers to obtain detailed information about their foreclosure practices, document handling and title clearance operations. On-site servicer inspections are scheduled for the first two weeks of December, said FHA commissioner David Stevens.
Duke said the four agencies will complete the on-site portion of their examinations by yearend with a report scheduled for release shortly thereafter.
"In our examinations, the agencies are reviewing firms' policies, procedures, and internal controls related to foreclosure practices and are sampling loan files to test the effectiveness of those policies, procedures and internal controls," she said. "We are prepared to take supervisory action where necessary and appropriate to hold institutions accountable for poor practices."
Besides foreclosure practices and procedures, the examiners will be looking at staffing levels, vendor management of outside law firms, quality control processes/internal audits, and foreclosure workflow processes and loan documentation procedures.
