The White House said Tuesday that the government is committed to holding banks accountable for any laws that are broken during an ongoing foreclosure fraud scandal that led the nation's largest banks to briefly halt foreclosures across the country.
"As institutions are determining their next steps in addressing these issues, we remain committed to holding accountable any bank that has violated the law," said White House spokesman Robert Gibbs in a statement.
Gibbs also said that the Federal Housing Administration and the Financial Fraud Enforcement Task Force are investigating the foreclosure process. The Justice Department is investigating as well, and the administration has also said it supports the investigations of attorneys general in all 50 states.
"It's good that they're doing that, for sure, but most of the investigations should have happened three or four years ago," said John Taylor, president of the National Community Reinvestment Coalition. Taylor and other consumer advocates have said the problem spans from the loan origination that inflated the housing bubble to the failure to modify mortgages after it burst, not simply when a foreclosure is already inevitable. "What they're responding to is all this 'robosigning' and improper processes for ensuring proper documents are included. That's kind of the tail end of the process."
Members of Congress have demanded a national foreclosure moratorium after mortgage servicers' employees admitted they didn't review information in thousands upon thousands of foreclosure documents. The admissions have led consumer advocates to question the propriety of foreclosures everywhere, but mortgage servicers say they have found no evidence that anybody was wrongly foreclosed.
Bank of America announced on Monday that it would resume foreclosures in 23 states where a court's approval is needed to foreclose.
The Obama administration has resisted a national moratorium, saying it would be more harmful for homeowners than allowing foreclosures to continue.
One top bank regulator told HuffPost that the fraud is limited to paperwork errors affecting only seriously delinquent borrowers who are doomed to foreclosure. Consumer advocates say there is ample evidence of sloppy servicing leading to improper foreclosure proceedings.
"The problem is we have such a backlog around this country of homeowners who need a modification or a refinance and are not getting it. Most of these people simply need more collaboration on the part of servicers and lenders in order to get those loans modified or refinanced," said Taylor. "That's what a moratorium would address. It would give the counselors, the legal services people the time to do a workout that would make sense."