WASHINGTON (Reuters) - U.S. President Barack Obama's housing secretary said Sunday "it's shameful" that financial institutions may have made the housing crisis worse by improperly processing foreclosures.
Shaun Donovan, secretary of the U.S. Department of Housing and Urban Development, said in a column on the Huffington Post website that a comprehensive review of the foreclosure crisis was under way and that the administration would respond with "the full force of law where problems are found."
There have been allegations that banks failed to review foreclosure documents properly or submitted false statements when they foreclosed on properties.
In addition to inquiries by attorneys general in all 50 U.S. states, the U.S. Justice Department and banking regulators, the U.S. Securities and Exchange Commission has begun a preliminary investigation.
Donovan, in his column, wrote: "The recent revelations about foreclosure processing -- that some banks may be repossessing the homes of families improperly -- has rightly outraged the American people."
"The notion that many of the very same institutions that helped cause this housing crisis may well be making it worse is not only frustrating -- it's shameful," Donovan added.
The housing secretary said investigative agencies are sending out a clear message: "Banks must follow the law -- and those that haven't should immediately fix what is wrong."
"Given the problems that have already been found and admitted to by some servicers, the Obama administration fully supports the voluntary moratoria that are already in place and others should they be deemed necessary," Donovan wrote.
"Some have suggested, however, that all foreclosures in every state, under every servicer, should be stopped. But a national, blanket moratorium on all foreclosure sales would do far more harm than good -- hurting homeowners and home-buyers alike at a time when foreclosed homes make up 25 percent of home sales," Donovan added.
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