Bernanke: We Take Violations Seriously
Federal Reserve Chair Ben Bernanke announced Monday that the Fed would release preliminary findings in November from its investigation of lender and mortgage servicers’ processes.
“We take violations of proper procedures seriously,” Bernanke said in a presentation to a conference on mortgages and housing finance, hosted by the Fed and Federal Deposit Insurance Corp.
Bernanke also said in his previously released remarks: “More than 20 percent of borrowers owe more than their home is worth, and an additional 33 percent have equity cushions of 10 percent or less, putting them at risk should house prices decline much further. With housing markets still weak, high levels of mortgage distress may well persist for some time to come.”
Source: Bloomberg, Scott Lanman (10/25/2010)
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Head of FDIC Supports Loan Write-Downs
The possibility of solving the underwater mortgage problem by writing down principal has been deemed politically impossible by the Obama administration, but some government officials see write-downs as the best long-term solution.
One of the most outspoken supporters of write-downs is Federal Deposit Insurance Chair Sheila Bair. This week, she called underwater mortgages a continuing problem and said the FDIC is “actively looking” at ways to encourage principal write-downs in the deals it does to facilitate acquisitions of failed banks.
Overall, Bair was positive about housing finance. “After three long and difficult years for housing and mortgage finance, I think we’re seeing some progress in stabilizing our housing markets,” she said.
Source: Reuters News, Karey Wutkowski (03/04/2010)
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