WASHINGTON, DC-Lenders such as Bank of America, GMAC, Wells Fargo and Citigroup may be insisting that their foreclosure practices and procedures complied with the law, but there has been enough doubt about that issue that the government is apparently investigating.
The investigation, still in its early days as the Washington Post reports, has sent shudders throughout the mortgage and real estate industry, which had been hoping to have seen the worst of the crisis past. However, comments made by Housing and Urban Development secretary Shaun Donovan to Bloomberg News on Wednesday suggest the investigation’s reach may be limited.
As to whether lenders have been foreclosing on homeowners with in accurate or illegal documents, he said there is no evidence of systematic wrong doing. Instead, he emphasized other areas of inquiry, namely whether lenders have been complying with FHA regulations as to loan modifications.
Donovan made his comments after a meeting with the members of President Obama's Financial Fraud Enforcement Task Force, the intra-agency group that has been spearheading the investigation.
Donovan also said the group is coordinating with state attorneys general on these issues. The Obama Administration has made clear, in one manner or another , that it does not want to see a moratorium on foreclosures for fear that the achingly slow housing recovery will come to a halt. That, however, is not so much of a concern for the attorneys general that are investigating the issue.
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