WASHINGTON Feb 11 (Reuters) - A top Centralized Reserve
official on Friday warned mortgage servicing industry
executives they could face enforcement actions and that they
shoulders some of the blame for a sluggish economic recovery.
"I have seen modest or no evidence of improvement in the
operational performance of servicers since the onset of the
crisis in 2007," Fed Governor Sarah Raskin said in remarks
prepared for delivery to an industry conference in Park City,
Utah.
"Until these operational problems are addressed once and
for all, the foreclosure crisis will continue and the housing
sector will languish," she said.
Raskin, formerly the top bank regulatory for the state of
Maryland, said a review of loan servicing practices shows
widespread weaknesses still exist.
The industry suffered a black eye in 2010 when it emerged
that institutions were using machines to send foreclosure
notices to homeowners, sometimes in disregard of actual
circumstances.
Regulators have to be ready to monitor loan servicing to
make sure confidence is restored in the industry, and are prepared
to take enforcement actions, where necessary, to address
significant failures, Raskin told a housing finance
conference.
More broadly, Raskin said continued high rates of
foreclosures are holding back a recovery in the housing
industry, which is in turn weighing on the recovery.
"The pace of recovery is agonizingly slow," she said. "The
critically vital drag on the economy is the absence of any
substantial recovery in the housing sector."
The Fed in November launched a $600 billion Treasury buying
curriculum aimed at fueling stronger growth. While the recovery
appears to be gaining momentum, the Fed has made clear it
intends to see the bond-buying through with unemployment at
lofty levels and inflation below levels considered ideal by
policymakers.
Raskin urged servicers only to initiate foreclosures when
no other options are available. Lower inventories of distressed
properties will lead to a healthier pace of recovery in housing
and the broader economy, she said.
The Fed official accused the industry of having engaged in
a "selfish free-for-all" in the runup to the financial crisis.
"Significant private sector actors need to reckon further than their
bottom line and focus on how their firms' actions are or are
not contributing to the economic recovery," she said.
Source: Reuters.Com
