Federal Reserve Chairman Ben Bernanke said the Fed is working to complete an in-depth review of practices at a number of large financial institutions.
“We are looking intensively at the firms’ practices, procedures and internal controls related to foreclosures and seeking to determine whether systemic weaknesses are leading to improper foreclosures,” Bernanke said in a speech Monday in Arlington on the future of housing.
Bernanke said the Fed expects preliminary results from the review next month. He also said staff for the Fed and other agencies are evaluating the potential effects of the foreclosure problems on the real estate market and financial institutions.
A stream of problems related to foreclosures has rocked the system in recent weeks, leading to calls from Senate Majority Leader Harry ReidHarry ReidThe Hill's 12:30 Report Hopes rise for law to expand access to experimental drugs If Gorsuch pick leads to 'crisis,' Dems should look in mirror first MORE (D-Nev.) and others for a moratorium on foreclosures.
Some foreclosure proceedings have been set into motion without the proper paperwork.
Bernanke said homeownership can only be good for the country if it can be sustained, as purchases that are highly leveraged or unaffordable subject both borrower and lender to too much risk.
More than 20 percent of borrowers now owe more than their home is worth, Bernanke said, and an additional 33 percent of borrowers have equity cushions of 10 percent or less.