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Bernanke: We take foreclosure problems seriously

By Aaron Smith, staff writer


NEW YORK (CNNMoney.com) -- Federal Reserve Chairman Ben Bernanke said Monday that a federal agency review of foreclosure procedures at the nation's largest mortgage servicers should be completed next month.

"We take violations of proper procedures seriously," Bernanke said in remarks prepared for delivery at a joint conference in Arlington, Va., with the Federal Deposit Insurance Corp. on Wall Street's foreclosure procedures.

"I would like to note that we have been concerned about reported irregularities in foreclosure practices at a number of large financial institutions," Bernanke said. "The federal banking agencies are working together to complete an in-depth review of practices at the largest mortgaging servicing operations."

"We are looking intensively at the firms' policies, procedures and internal controls related to foreclosures and seeking to determine whether systematic weaknesses are leading to improper foreclosures," he said.

Bernanke also highlighted the precarious state of the housing market.

"Now, more than 20% of borrowers owe more than their home is worth and an additional 33% have equity cushions of 10% or less, putting them at risk should house prices decline much further," he said. "With housing markets still weak, high levels of mortgage distress may well persist for some time to come."

Bernanke said the conference will also focus on results from the ongoing program by the Federal Reserve Bank called the Mortgage Outreach and Research Effort, or MORE.

The Federal Reserve chairman detailed various efforts by the MORE program to help beleaguered homeowners. These include an online tool allowing homeowners to file unemployment insurance benefits as income to quality for federal mortgage modification programs.

Bernanke said that more details of the MORE program can be accessed at the Federal Reserve Bank of Chicago's website. To top of page

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