Distracted by the midterm elections and facing continuing uncertainty about the extent of the foreclosure problems, it appears — for now at least — that Congress will weigh in only tentatively.
The Senate Banking Committee has scheduled a Nov. 16 hearing on the matter, and the House Financial Services Committee is widely expected to follow suit.
Beyond that, it is unclear how Congress will react until lawmakers have a better grip on the situation.
"We still just do not know what exactly is going on, how pervasive it is, if it is matter of technicality, of not crossing 't's and dotting 'i's or something much bigger than that and something that needs a fix," Rep. Brad Miller, a North Carolina Democrat who has long championed stronger consumer protections, said in an interview.
Lawmakers are pushing to do their own investigation even as all 50 states have launched foreclosure probes.
It is unclear which party will be in charge by the time lawmakers have a chance to consider legislation, or how differently the two parties would seek to treat the issue. While some Democrats like Rep. Maxine Waters, D-Calif., are pressing lenders for a blanket foreclosure moratorium, others like President Obama and Sen. Chris Dodd have warned such a move could damage the economy.
Republicans have also called for investigations into the foreclosure problems but have mostly steered clear of specific policy recommendations.
Sen. Bob Corker, a Tennessee Republican who serves on the Banking Committee, said it would be a mistake for Congress to interfere.
"I don't think Congress should respond at all," Corker said in an interview. "Hopefully this is something that can be worked through fairly rapidly."
He said the paperwork controversy should be a lesson to investors of mortgage-backed securities about variance in foreclosure proceedings and a reminder that Congress needs to address the future of the housing finance system.
"What this whole episode has shown is that each state handles foreclosures in different ways, and that matters to those who invest in housing securities," he said. "This whole process has been enlightening. It's unfortunate that some of the entities involved in the foreclosure process have not done everything necessary from a technical standpoint. At the same time, I've seen no evidence that has shown people who have been put out of their homes that shouldn't have been."
Corker said he was pleased by the administration's opposition to a blanket foreclosure moratorium, agreeing it would damage the economy.
"Congress should not be involved in passing legislation period as it relates to foreclosures," he said. "I hope we will not create some sort of knee-jerk reaction to this, which often is the case."
But, like other Republicans, Corker saw a lesson in the situation for reform of the housing finance sector, an issue Congress is expected to take up next year.
"I do think this should be taken into account as we look at housing finance," he said. "Hearings would be beneficial … there is a lot to be learned, but hopefully what will be learned is how we deal with housing finance in the future."
In an e-mail to American Banker, Sen. Richard Shelby, the lead Republican on the Senate Banking Committee, also referenced housing reform, noting he unsuccessfully pushed for a revamp of the system as part of regulatory reform.
