Foreclosure mess impact could be severe: panel | Reuters

Foreclosure mess impact could be severe: panel | Reuters:

"'If such problems were to arise on a large scale, the housing market could experience even greater disruptions than have already occurred, resulting in significant harm to major financial institutions,' the 125-page report said. 'At present, the reach of these irregularities is unknown.'

The panel, created to oversee the $700 billion bank rescue approved by Congress in 2008, also said banks could end up losing $52 billion from so-called mortgage put-backs, or loans that were sold to other investors but would have to be bought back due to problems that have turned up.

Those losses would be borne predominantly by Citigroup, JPMorgan Chase, Bank of America and Wells Fargo, the panel said.

LAWMAKER SHOWDOWN

Banks have been eager to downplay the impact of the foreclosure paperwork mess, saying evictions through foreclosure have been 'materially accurate.'

The banks face lawmaker scrutiny later on Tuesday in hearings by the Senate Banking Committee, and then another hearing on Thursday before the House of Representatives Financial Services Committee."