The federal interagency foreclosure task force that has been examining the largest mortgage servicers has been given a broader mandate by the new Financial Stability Oversight Council that held its second meeting on Tuesday.
In addition to determining the scope of the foreclosure problem, the interagency reviews will encompass loan modifications, loan putbacks and securitization trusts.
"So far the review has found widespread and inexcusable breakdowns in basic controls in the foreclosure process," Treasury assistant secretary Michael Barr told the oversight council.
"These problems must be fixed," he added, and homeowners who have been harmed must be given redress.
However, the reviews are also delving into whether servicers are properly considering troubled borrowers for loan modifications.
Both Federal Housing Administration and Treasury are conducting "intensive reviews" of modifications, Barr said.
Besides foreclosure and modification issues, the agencies are looking at the failure of lenders to follow investor guidelines for originating mortgages during the height of the boom. This review is designed to get a handle on put-back risk.
The examiners also are trying to determine whether documentation problems exist with respect to loans in securitization trusts.
"Regulators have begun to review compliance with servicers, custodians and trustees with procedures required by the pooling and servicing agreements and related contracts," he told the panel Tuesday.
Barr said he would report on the progress of these reviews at the FSOC's next meeting in January. The Treasury official indicated some supervisory actions with respect to foreclosure issues could be meted by the end of January.
