many american families – more than 65 percent – own their homes. the fall in house prices has caused families to cut back on their spending and has prevented them from using their home equity to fund education expenses or start small businesses. the decline in house prices has also impeded families from benefiting from the historically low level of interest rates, as perhaps only half of homeowners who could profitably refinance have the equity and creditworthiness needed to qualify for traditional refinancing. 1 throughout the successive waves in foreclosures that have occurred since 2007, problems in mortgage servicing have emerged and persisted. these problems have included critical weaknesses in mortgage servicers ’ foreclosure governance processes, foreclosure document preparation processes, and oversight and monitoring of third - party law firms and other vendors. collectively, these problems have hampered the ability of the courts and the markets to work through the foreclosure inventory in an efficient manner. significant judicial resources are being expended on resolving the legal problems related to mortgage servicing. indeed, the dockets of federal courts, bankruptcy courts, and state courts include numerous cases involving a wide range of troubling issues, such as claims of missing or forged promissory notes ; claims that mortgage servicers have foreclosed on the houses of active - duty u. s. soldiers who are legally eligible to have foreclosures halted ; sworn affidavits containing false “ facts ” that homeowners were in arrears for amounts not yet due ; claims of falsifications of documents required to transfer ownership of the mortgage ; allegations of false affidavits claiming homeowners owe fees for services never rendered ; and claims of false affidavits overstating how much homeowners are behind on their payments. and this is a sampling of the legal issues related just to mortgage servicing. there is another galaxy of vexing issues surrounding recordation and title issues and claims related to an entity called the mortgage electronic registration system, or mers. significantly, the necessarily slow pace of a judicial response to these legal issues hinders the ability of the housing market to regain function and become a driver of a more - robust economic recovery. see board of governors of the federal reserve system ( 2012 ), “ the u. s. housing market : current conditions and policy considerations ( pdf ), ” white paper ( washington : board of governors of the federal reserve system, january ). bis central bankers ’

##osures. the corrective action plans also must address other significant mortgage servicing and foreclosure - governance shortfalls and must be designed to ensure compliance with state and federal mortgage servicing and foreclosure laws. they must also improve foreclosure management information systems ; establish robust controls and oversight over the activities of third party vendors ; and strengthen communication with borrowers during loss mitigation and foreclosure processes. many of the corrective action plans mandated by the enforcement actions require mortgage servicers to change the way they conduct critical aspects of their business. for example, the corrective action plans require improved communications with borrowers before a foreclosure may proceed. in particular, the mortgage servicer must thoroughly explore loan modification options with the homeowner. the mortgage servicer must also improve the way it communicates with homeowners by establishing a “ single point of contact ” for homeowners in loss mitigation or foreclosure to use when they need help from the mortgage servicer in addressing problems. by having a single person at the mortgage servicer with whom to communicate, homeowners should be able to receive more reliable, accurate, and prompt board of governors of the federal reserve system ( 2011 ), “ federal reserve issues enforcement actions related to deficient practices in residential mortgage loan servicing and foreclosure processing, ” press release, april 13. bis central bankers ’ speeches information about their mortgages, modification options, and the status of any foreclosure actions. these orders also require each firm to hire an independent consultant to review the firms ’ past practices to identify specific cases in which these practices resulted in financial injury to specific consumers. this enforcement technique, known as a “ look - back, ” is the current subject of much debate in the mortgage servicing context because it requires firms to use an independent consultant. the consultant reports both to the enforcing agency and to the firm, allowing the agency to better monitor and judge the completeness of the look - back. requiring an independent review of certain banking operations is not a new enforcement tool. historically, independent reviews have most often been required by the federal reserve in connection with a banking organization ’ s money - laundering or office of foreign assets control ( ofac ) sanctions - compliance programs. independent reviews typically require the regulated entity to hire a third party to do more time - intensive work than the regulator has already done. the examiners have perhaps found a problem and want the institution,