WASHINGTON, D.C. — A months-long investigation into abusive mortgage practices by the Federal Reserve found no wrongful foreclosures, members of the Fed’s Consumer Advisory Council said Thursday.
During a public meeting attended by Fed chairman Ben Bernanke and other regulators, consumer advocates on the panel criticized federal bank regulators for narrowly defining what constitutes a “wrongful foreclosure.” At least one member of the panel voiced concerns that the public would not take the Fed’s findings of improper practices seriously, since the wide-ranging review did not find a single homeowner who was wrongfully foreclosed upon.
The Fed’s findings seem to support claims from the banking industry, which has admitted to sloppy practices but has maintained that the homeowners whose homes have been repossessed were substantially behind on their payments. The Fed’s report has not been released to the public.
All 50 state attorneys general joined together last fall to probe banks’ foreclosure practices after several companies halted home repossessions when improper paperwork practices — like the so-called “robo-signing” scandal — came to light. The law enforcement officers have said they’ve found banks violated numerous state laws. State and federal officials are considering a large-scale settlement with banks and mortgage servicers that could include penalties totaling up to $30 billion and requirements to modify more distressed mortgages