Raskin Calls Servicers to fix sloppy and deceptive practices

Federal Reserve Gov. Sarah Bloom Raskin wants stronger penalties for mortgage servicers that broke the law and are partly to blame for the current foreclosure crisis.

The Wall Street Journal quotes Raskin from a conference of the Association of American Law Schools on Saturday:

It is important “that the severe misconduct that has been uncovered in the mortgage servicing sector be addressed through intensified public enforcement of the law as part of the overarching effort to rebuild our damaged communities and neighborhoods.”

Raskin said the Fed must impose fines on servicers as part of a push for more forceful government action to fix the broken housing market.

The Fed and other federal regulators investigated 14 of the largest mortgage servicers and last April found each had “significant problems.” An independent review process by each of the companies is one of several efforts to address the significant problems, including banks’ use of so-called robo-signing. Raskin says forcing lenders to reduce the principal amount owned on a mortgage as part of an enforcement action is still on the table.

Related articles

• Raskin Urges Penalties on Mortgage Servicers (nytimes.com)
• Fed Should Fine Law-Defying Mortgage Servicers, Raskin Says (businessweek.com)
• Fed’s Raskin says additional easing warranted (huffingtonpost.com)