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Fed urges national foreclosure process standards

Despite recent news that a decline in foreclosure filings has occurred in recent months, there can be no question the foreclosure crisis has not reached its end. Many homeowners have received Ohio foreclosure notices during the economic downturn. The housing market still has left a large number of Ohioans, and people across the country underwater on their mortgage.

States differ in the types of foreclosure processes that are available. This blog has reportedly that roughly 27 states, like Ohio, use a judicial foreclosure process. The so-called "robo-signing" scandal involved states with judicial foreclosure processes. The Federal Reserve announced late last week it wants to see federal standards in foreclosures to avoid future abuses on consumers.

The Fed filed a statement in two subcommittees in the U.S. House of Representatives regarding the foreclosure processes in this country. The statements also indicate the Fed continues to maintain close contact with the Justice Department regarding negotiations with five of the nation's largest banks. The Justice Department continues negotiates with the lenders regarding deficiencies in mortgage servicing and foreclosure practices.

In April, the fed and other federal regulators issued enforcement actions against 14 mortgage servicing companies regarding deficiencies in the handling of home loan accounts. According to the statement filed in two House financial services subcommittees the Fed says ""The Federal Reserve also indicated, at the time the enforcement actions were issued, that it believes monetary sanctions in these cases are appropriate and plans to announce monetary penalties."

In efforts to clean up the housing market mess, suggestions have arisen that federal laws should be created to force banks to do principle writedowns for some troubled mortgages. Some have suggested banks should be required to pay into a fund to help qualified distressed homeowners.

Source: Thomson Reuters News and Insight, "Fed seeks national foreclosure handling standards," Glenn Somerville 7 Jul 2011

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