HUD is increasing its enforcement efforts to recoup millions of dollars in losses on improperly underwritten FHA-insured loans, holding lenders accountable for their actions, Housing secretary Shaun Donovan told a Senate panel Tuesday morning.
Donovan told the Senate Banking Committee that the Federal Housing Administration's mortgage insurance fund will take in $900 million from the recent $25 billion foreclosure settlement with five major servicing banks — a deal that includes recently disclosed payments going to FHA from Bank of America, and Citigroup.
"The settlement is the single biggest recovery the FHA fund has even made," Donovan testified.
He stressed that it is "very very important" that the Department of Housing and Urban Development continue these enforcement efforts to hold mortgage firms accountable for loans that don't "meet our standards."
The secretary told lawmakers that HUD began an investigation of the largest FHA servicers in the summer of 2010 and found high "error rates" in their servicing and foreclosure practices.
HUD is planning to release reports on those servicing investigations this week. Sensitive data will be "redacted," the secretary added.
He also noted that the documents for the $25 billion servicing settlement should be finalized later this week and recorded in court.
