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HUD Secretary: Problems with Foreclosure Paperwork Not Widespread

The federal government's Financial Fraud Task Force is ""investigating possible criminal violations"":http://dsnews.comarticles/task-force-pursues-criminal-investigation-of-foreclosure-paperwork-errors-2010-10-19 in connection with foreclosure documentation errors reported by at least five mortgage servicers.

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""HUD"":http://www.hud.gov is spearheading the multi-agency probe, which is in its early stages. But HUD Secretary Shaun Donovan told reporters this week that his office has been scrutinizing the industry's servicing practices related to ""Federal Housing Administration"":http://www.fha.gov (FHA) loans for the past five months, and has concluded that the documentation problems grabbing headlines are not widespread.

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Donovan said, ""We have not found any evidence at this point of systemic issues in the underlying legal documents.""

But he added that the administration and banking regulators will hold lenders accountable where mistakes are uncovered and are ""committed to forcing changes"" in procedures to ensure integrity is maintained throughout the foreclosure process.

The full investigation won't be complete until after the end of the year, Donovan said, adding that penalties and repercussions for lenders could range from fines to being banned from writing mortgages.

""Banks expect homeowners to meet their obligations. American homeowners should have the same expectation that banks and mortgage servicers meet all of their obligations,"" Donovan said. ""Nobody should lose their home through a mistake. Even if it's one person, it's shameful....No matter how widespread it is, it's wrong.""

Donovan says the problems with foreclosure documentation are only one of the broader concerns the administration has related to the mortgage servicing industry, but he did not elaborate on other specific issues that the multi-agency task force may be looking into.

About Author: Carrie Bay

Carrie Bay is a freelance writer for DS News and its sister publication MReport. She served as online editor for DSNews.com from 2008 through 2011. Prior to joining DS News and the Five Star organization, she managed public relations, marketing, and media relations initiatives for several B2B companies in the financial services, technology, and telecommunications industries. She also wrote for retail and nonprofit organizations upon graduating from Texas A&M University with degrees in journalism and English.
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