FHA-insured mortgages may be under review for foreclosure process
Questions about the validity of the foreclosure process continue to spread and may have reached the Federal Housing Administration. Washington advisory firm Patton Boggs LLP said the federal agency may "soon be taking steps to address faulty foreclosures of FHA-insured mortgages as a result of the recent foreclosure furor." The firm said it expects the Mortgagee Review Board of the Department of Housing and Urban Development "will probably wade into the foreclosure crisis." A few weeks ago, the Federal Reserve announced its own plans to review foreclosure practices at the nation's largest mortgage servicing operations. Most the biggest banks in the U.S. suspended their foreclosure process after allegations of improper documentation and illegal affidavit signing were disclosed. Attorneys general in all 50 states have initiated their own reviews of the foreclosure procedures of mortgage servicers. The board can sanction, suspend or even terminate lenders and servicers that are found to have erred during a foreclosure on a FHA-insured mortgage. Patton Boggs said the board also has the authority to assess and collect penalties from the perpetrators for violations of HUD regulations and guidance. "Mortgagees who service FHA-approved mortgages should be concerned about the likelihood of FHA action. Loss mitigation and foreclosure procedures and case files of foreclosures should be carefully reviewed," according to Patton Boggs. Write to Jason Philyaw.