HUD Chief: White House Won't Tolerate 'Business as Usual' in Mortgage Market

Speaking to the controversy surrounding possibly illegal foreclosures, Secretary of Housing and Urban Development Shaun Donovan said Wednesday that the White House would "not tolerate business as usual in the mortgage market."

Donovan said the results of an ongoing, multiagency review had found "significant differences" in the performance of mortgage lenders, but that the Federal Housing Agency (FHA) had not yet found any evidence of "systemic issues," in the foreclosure market.

Asserting that the Obama administration was "committed" to resolving issues surrounding the mortgage market, Donovan pointed to a meeting held earlier with 11 federal agencies -- part of an ongoing process to review foreclosures, which is expected to conclude at the end of the year.

Donovan said that in its review, the FHA is paying special attention to whether the foreclosure process was being followed correctly and whether lending agents were taking steps to keep people in their homes.

"Throughout our reviews, as we uncover bad practices, cutting corners or sloppy processes that disregard or ignore the rights and protections of any homeowner, we're committed to forcing institutions to change the way that they conduct business," he said.

Though Donovan said that the review's initial findings showed evidence of noncompliance "with FHA rules and regulations," he would not disclose which lenders were the worst offenders, nor would he specify how far along in the process the FHA might be. "There's a due process here," he said.

In the meantime, mortgage lenders, including Bank of America and GMAC, have announced plans to resume foreclosures following a temporary moratorium -- which Donovan called "their business decision." Donovan said the federal government was making efforts to expedite its review. But, Michael Barr, assistant treasury secretary for financial institutions, added that "fundamentally, this is up to the banks and the servicers to fix. This is not a problem for Secretary Donovan to fix."

In previous weeks, amid calls for a national moratorium on foreclosures, the White House maintained that a freeze on home foreclosures would be disastrous to the still-recovering housing market. "There are a series of unintended consequences to a broader moratorium," said Press Secretary Robert Gibbs.

Donovan, for his part, rebuffed any suggestions that the White House was late to the game in resolving housing market issues. "This is a longstanding focus that we've had," he said.