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US Task Force To Probe Foreclosures

US Task Force To Probe Foreclosures
US Task Force To Probe Foreclosures

The White House is warning banks it will hold them accountable for any illegal mortgage practices, in the wake of a nationwide foreclosure scandal. Spokesman Robert Gibbs says an interagency task force on financial fraud has launched an investigation into the foreclosure process. This comes after two major financial institutions said they will resume foreclosing on homes.

Allegations that some financial institutions used flawed paperwork to evict struggling borrowers from their homes has captured the attention of the Obama administration.

White House spokesman Robert Gibbs said Tuesday an interagency task force is looking closely at banks' foreclosure activities. "We are looking at their process in order to determine their compliance with the law. Obviously, they have certain requirements under the law that have to be met, and if they're not meeting those requirements, they certainly can face fines from us and they can face legal actions from homeowners," he said.

Gibbs says a federal agency that guarantees mortgage loans, the Federal Housing Administration, is also investigating.

The accusations center on shoddy paperwork by mortgage employees that may have illegally forced thousands of people out of their homes.

Attorneys general from all 50 U.S. states have launched probes into the scandal, which has threatened bank earnings and could further jeopardize the fragile housing market.

On Tuesday, Gibbs stopped short of joining calls for a national moratorium on foreclosures. "We have talked about, over the past week or so, the danger that we see in, though, halting the entire housing market, and the danger, it would provide, or the danger it would potentially provide, writ large, on the economy," he said.

Bank of America and GMAC Mortgage have announced they will resume home foreclosures in the 23 states that require a judge's signature to move the process forward. They had recently joined other major lenders who halted foreclosures.