An ongoing review by government regulators of foreclosure paperwork problems has found "widespread and, in our judgment, inexcusable breakdowns" in the process for seizing homes of delinquent borrowers, a top Treasury Department official said Tuesday.
"These problems must be fixed," said Michael Barr, assistant secretary for financial institutions.
But the sweeping review of the foreclosure process won't be completed until the end of the year, and a formal report based on that review won't be finished until late January, Barr told members of the Financial Stability Oversight Council.
The newly formed council brings together the government's top regulators, including Treasury Secretary Timothy F. Geithner, Federal Reserve Chairman Ben S. Bernanke and Securities and Exchange Commission Chairwoman Mary L. Schapiro, to monitor the financial system for signs of major risks.
The council, which held its second meeting Tuesday, was created by the financial reform law.
Barr updated council members on the status of the review by a foreclosure task force set up by the Obama administration, which is coordinating its effort with state banking regulators and a probe by all 50 state attorneys general.
Obama administration officials have balked at calls for a nationwide moratorium on foreclosures and have said the review had found no signs that the issue posed a threat to the financial system.
The task force is trying to determine the scope of the paperwork problems and intends to hold banks accountable to fix them, including assessing penalties and providing redress to affected homeowners, Barr said.
"We are working to bring clarity and certainty as quickly as we can, but reviews will take time," he said.