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. (More Ben Bernanke stories.)
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