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Bair Calls for Lenders to Fix Foreclosures Crisis



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By : Scott Zahid    99 or more times read
According to Sheila Bair, chairperson of the Federal Deposit Insurance Corp., the method how lenders are dealing with foreclosures of homes could damage the nascent recovery of the economy.

She was addressing a 700 strong audience at a breakfast hosted by a womenís business group named the Boston Club. She said the harsh truth was the necessity of a performing foreclosure market for a performing housing market.

Her remarks reflect the worry of leaders of the US govt. about the potential damage caused by the foreclosure crisis. Several leading banks have admitted that their procedures of seizing homes from struggling homeowners through foreclosures were far from satisfactory. Several lenders, like Bank of America, had announced a freeze on foreclosure properties across numerous states in order to review their paperwork.

It remains hazy whether the basic issues are only procedural problems that can be sorted with a few months of clerical efforts as claimed by most lenders or if the scandal of robo-signers has a major impact that could ruin the recovery of the housing market. For instance, some housing industry experts point out that investors owning bundles of mortgages could pressurize banks to take back bad loans, burdening them with more losses and reducing the provision of new loans for economic recovery.

Later, Bair said the FDIC had no idea on the true extent of the foreclosure paperwork problems. However, a Lexington based economist, Patrick Newport, was of the opinion that paperwork problems are temporary and may delay foreclosures for a few months. Newport agreed with others that he didnít know the true extent of the problem.

A recent Congressional Oversight Committee whose chairman was Elizabeth Warren, a professor of Harvard, could only detail the best and worst case picture, and it pressed US regulators to go deeper and get ready for more dangerous outcomes. Newport was of the opinion that there was a great deal of uncertainty in the matter.

The latest foreclosure problems have emerged at a time when the housing market is skating on thin ice due to the growing problem of unemployment, increased supply of properties and the cessation of a federal credit that enabled buyers of homes to close the deals. Early this week, according to trends in home price, indices revealed that housing prices declined by 1.5% in 2010 third quarter compared to 2009.

Bair highlighted a number of issues, such as the impact of the foreclosures crisis if more women occupied senior positions in financial companies. Speaking before a gathering of business women, Bair pointed out that in the early stages of the crisis, in one meeting between financial executives and govt. officials, she was the only women in the room. She said that the financial institutions needed some feminine qualities like risk aversion, caution and long term thinking.
Original Post: http://www.mostlyforeclosures.com/blog/sheila-bair-lenders-fix-foreclosures-crisis.html on MostlyForeclosures.com, your source of lists of foreclosure.

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