WRAPUP 1-US housing agency head urges banks to help borrowers

* U.S. banks Regions, HSBC defend foreclosure processes

* Bankers support greater reviews and reform

* Mortgage lenders face ‘enormous trust deficit’-FHA

By Maria Aspan

NEW YORK, Oct 26 (BestGrowthStock) – A top federal regulator urged
the U.S. banking industry (Read more about the banking industry recovery.) to help struggling borrowers as a way
to regain public faith lost in the mortgage mess, even as more
banks defended their foreclosure processes on Tuesday.

Federal Housing Administration Commissioner David Stevens
told mortgage bankers meeting in Atlanta that the industry
faces “an enormous trust deficit,” and must take stronger steps
to participate in government programs to help homeowners.

U.S. attorneys general for all 50 states are jointly
investigating whether banks that foreclosed on thousands of bad
loans failed to review documents properly or submitted false
information to evict delinquent borrowers. They have been
criticized for using “robo-signers” to process large numbers of
foreclosure documents without full review

HSBC Bank USA [HBABU.UL] (HABA.L: ) and Regions Financial
Corp (RF.N: ), which are not among the largest U.S. mortgage
servicers, said their internal reviews have not turned up any
evidence of the type of faulty foreclosure processes that have
sparked a nationwide furor and government investigations.

“We have looked. We don’t have robo-signers, we don’t
believe we have that issue,” said HSBC Bank’s U.S. Chief
Executive, Irene Dorner, during a panel discussion on Tuesday.

Similarly, Regions said during an earnings presentation
that it uses a “solid and tested” process in repossessing homes
CEO Grayson Hall said the bank only takes back property after
“all other options have been exhausted.” He said the
Birmingham, Alabama-based lender handled some 260 home
foreclosures a month. [ID:nN26144555]


Take a Look-U.S. foreclosures under fire [ID:nN11106777]

Factbox-Foreclosure problems snowball [ID:nN06278011]

Breakingviews-Mortgage mess headlines anew[ID:nN19136285]


Some of the largest mortgage servicers, including Bank of
America (BAC.N: ), briefly halted evictions nationwide earlier
this month while they reviewed thousands of foreclosure cases.

Dorner said the London-based HSBC did not expect to need to
suspend foreclosures.

The FHA is expanding its review of five major servicers to
others in the wake of the foreclosure flap, Stevens told
reporters after addressing the meeting.

“There’s a reflection in the media and a reflection in the
industry that we aren’t being held accountable enough,” Stevens


Stevens said some bankers have simply refused to
participate in government efforts designed to help borrowers
and shore up the fragile housing market, such a new FHA program
to help refinance some of the millions of borrowers who are
underwater on their mortgage. A quarter of borrowers have a
loan whose principal tops the home’s value, sharply limiting
their abilities to save money by refinancing, or moving.

Since the real estate market bust, which began in earnest
in early 2007, consumer confidence has cratered, putting
pressure on President Barack Obama to come up with a better
plan for repairing the housing market.

Obama’s fellow Democrats are expected to face the wrath of
voters in Nov. 2 congressional elections, with Republicans
expected to gain control of the House of Representatives and
perhaps even the Senate.

Lawsuits have already begun to trickle in and banks may
also face fines or be forced to repurchase faulty loans, which
would hurt profits.

Some bankers are attempting to quiet the outcry by publicly
supporting greater regulatory oversight of the foreclosure
process. HSBC’s Dorner, for example, told audience members that
she welcomed a coming visit from the bank’s U.S. regulator to
review its foreclosure processes.

“This is something that needs to be aired,” she said. “This
issue will turn into a political football.”

Royal Bank of Canada (RY.TO: ) Chief Executive Officer
Gordon Nixon went a step further on Tuesday, calling for
“significant reform” of the U.S. mortgage system.

“The residential mortgage structure in the United States is
at the heart of this (economic recovery) issue. It is still
problematic and I think it needs significant structural
reform,” he said in response to a question during a panel
discussion. [ID:nN26135861]
(Reporting by Maria Aspan in New York; additional reporting by
Joe Rauch in Charlotte and Al Yoon in Atlanta; Editing by
Jackie Frank)

WRAPUP 1-US housing agency head urges banks to help borrowers