Federal Deposit Insurance Corp. (FDIC) Chairwoman Sheila Bair said regulators will need to gather more information on mortgage documents to relieve a foreclosure bottleneck that threatens to derail the U.S. economic recovery.
"There is still more important information to be gathered," Bair said at a recent Securities Industry and Financial Markets Association conference in New York. "I do have a concern that the problems will slow down even further the foreclosure process."
JPMorgan Chase, Bank of America and Ally Financial's GMAC Mortgage unit are among loan servicers that temporarily halted home seizures to review paperwork after court documents showed employees may have submitted affidavits in foreclosure cases without confirming their accuracy.
"This is a serious problem," Bair said. "I see some serious issues with documentation."
The Dodd-Frank financial regulation law gave the FDIC new authority to create a mechanism for unwinding failed firms whose collapse might undermine the economy. President Obama, who signed the measure in July, proposed the rules overhaul after the 2008 bankruptcy of Lehman Brothers Holdings sparked a credit crisis that led to a U.S. bailout for banks.
The financial system is "so much better off" since the enactment of Dodd-Frank, Bair said at the conference. The FDIC is one of several regulators responsible for implementation of the law over the next few years.
Bair, whose five-year term as FDIC head expires next year, said she doesn't want to extend her stay.
"I do not want to be reappointed," she said. "New blood and fresh thinking is always important for regulators."