Many people in Daytona Beach have found themselves underwater in their homes, but not because of a hurricane or flood. The cause is the foreclosure crisis and being "underwater" refers to owing more on a house than the house is worth.

Unfortunately, this means that many homeowners in Florida and throughout the country have been served with foreclosure notices after they defaulted on their loan payments for a period of time. What's worse is that, as we have recently reported, some banks and lenders are using unacceptable means in dealing with homeowners who have defaulted on their loans.

Recently, the Federal Reserve said in a statement that it would like a uniform set of national standards to be constructed that would regulate how mortgage service companies handle foreclosures and treat consumers.

The statement was filed on Thursday with two financial services subcommittees of the United States House of Representatives and said that the Federal Reserve was also working closely with the United States Justice Department in taking action against 14 mortgage servicers that were operating inappropriately.

The Federal Reserve indicated that it was taking part in the negotiations with the five biggest bank lenders in effort to extinguish problems with the mortgage servicing and foreclosure practices. Reports have also surfaced in the media that the banks could be negotiating a settlement for millions of dollars to set up funds for states to stop many foreclosures.

The banks and other lenders have been under investigation for several months now by federal officials and state attorneys general after it was discovered that "robo-signing" and other questionable practices were common in the industry.

Robo-signing refers to a bank's practice of signing hundreds of foreclosure documents a day without going through the proper steps or even reading them. The practice is partly responsible for the overwhelming backlog of foreclosure cases that now exist in Florida and several other states.

Hopefully the states and federal government will work together to get the foreclosure crisis under control and hold the banks and lenders accountable for their unlawful practices.

Source: Reuters, "Fed seeks national foreclosure handling standards," Glenn Somerville and James Dalgleish, 7/7/2011.