Bernanke: Fed Probing Foreclosure Scandal

Will examine debacle's effect on real-estate market
By Newser Editors and Wire Services
Posted Oct 25, 2010 10:58 AM CDT
Bernanke: Fed Probing Foreclosure Scandal
In this July 22, 2010 file photo, Chairman of the Federal Reserve Ben Bernanke testifies before the House Financial Services Committee on Capitol Hill.   (Alex Brandon)

(Newser) – Federal banking regulators are examining whether mortgage companies cut corners on their own procedures when they moved to foreclose on people's homes, Federal Reserve Chairman Ben Bernanke said today. "We are looking intensively at the firms' policies, procedures, and internal controls," Bernanke said. "We take violations of proper procedure very seriously." Preliminary results of the probe are expected next month.

According to people familiar with the examination, the banking agencies are looking into whether companies had controls in place when foreclosure documents were signed and whether employees involved in the foreclosure process were adequately trained. The Fed will also examine the scandal's impact on the real estate market and financial institutions. Should it find wrongdoing, it has a range of options, including fines, and "cease and desist" orders. For details on the scandal, click here. (Read more Ben Bernanke stories.)

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