WASHINGTON — Housing and Urban Development Secretary Shaun Donovan said that a four-month review by his department has found "significant differences" in the performance of servicers but not enough for foreclosure errors to be considered a "systemic" issue.
The White House tried to step up its response to the foreclosure problems by holding a meeting with Donovan, Treasury Secretary Tim Geithner and bank regulatory officials on Wednesday.
Speaking to reporters afterward, Donovan said HUD will complete within nine weeks a review it began in May on loss mitigation and foreclosures involving Federal Housing Administration loans.
"We have not completed these reviews, but what we have found thus far is significant differences in the performance of servicers and, in particular, information that shows us that there is not compliance with FHA rules and regulations around loss mitigation," he said. "The performance across servicers is very different, so we are finding significant compliance [by] a number of servicers while others appear not to have met their obligations to borrowers or to the FHA."
Donovan would not say which servicers had fallen short but said his department would take appropriate action."We will follow up vigilantly on the potential noncompliance that we have found, and I want to be clear that we will demand that servicers take actions as required by FHA to do everything they can to keep borrowers in their homes," he said.
But Donovan denied the problems were widespread.
"We have not at this point found any evidence of systemic issues in the underlying legal or other documents that have been reviewed," he said. The current problems do not call into question the securitization structures, he said, and "we have not to date found any underlying concerns about those structures."
Along with the FHA review, the Financial Fraud Enforcement Task Force, the Justice Department and state attorneys general are jointly reviewing "robo-signing" of foreclosure documents. The Federal Housing Finance Agency has also directed Fannie Mae and Freddie Mac to adopt a policy dealing with foreclosure-process deficiencies. The bank regulators, too, are reviewing servicers.
Donovan said that if FHA finds deficiencies in its loans, it has a range of ways to enforce standards, including fines and banning the lender from FHA.
House Judiciary Committee Chairman John Conyers, meanwhile, sent letters this week to the Justice Department and Federal Housing Finance Agency asking them to provide clarity on the foreclosure policies of servicers, and enforcement actions against them.