Although foreclosure practices have traditionally been – and rightfully should remain – a domain of the states, the Federal Reserve has been expanding its expertise in working with the industry – first, in a review of non-bank subsidiaries in conjunction with other state and federal regulators, and, currently, with a review of loan modification practices by certain servicers.
As the current servicing issues began to emerge more clearly, the Federal Reserve and other federal banking agencies initiated an in-depth review of practices at the largest mortgage servicing operations. The review focuses on foreclosure practices generally, but with a concentration on the breakdowns that seem to have led to inaccurate affidavits and other questionable legal documents being used in the foreclosure process.