Federal Reserve Chairman Ben Bernanke said Monday that banking regulators have been concerned about "reported irregularities in foreclosure practices at a number of large financial institutions" and are conducting an in-depth review."We are looking intensively at the firms' policies, procedures and internal controls related to foreclosures and seeking to determine whether systematic weaknesses are leading to improper foreclosures," Bernanke said in prepared remarks to a housing finance conference in Virginia hosted by the Fed and the Federal Deposit Insurance Corp.
"We take violations of proper procedures seriously," Bernanke said.
Bernanke said preliminary results of that investigation are expected next month.
In addition to the investigation, the Fed and other banking regulators are looking into the potential effects of the mortgage paperwork problems on the real estate market and financial institutions.
The regulatory review comes as the Department of Housing and Urban Development, the Treasury Department, the Justice Department and other agencies are conducting their own comprehensive reviews of botched foreclosure paperwork.
"Now more than 20 percent of borrowers owe more than their home is worth, and an additional 33 percent have equity cushions of 10 percent or less, putting them at risk should house prices decline much further," Bernanke said.
"With housing markets still weak, high levels of mortgage distress may well persist for some time to come," he added.
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