, neighbors and neighborhoods suffer potential spillover effects from foreclosure sales because foreclosures may reduce the attractiveness of the neighborhood or may signal to the proposed basel iii capital rules would simultaneously introduce a specific minimum common equity ratio and define “ common equity ” so as to limit or exclude consideration of items that may not provide the loss absorbing capacity that common equity is supposed to represent. written testimony of phyllis caldwell, chief of homeownership preservation office, u. s. department of the treasury, before the house financial services subcommittee on housing and community opportunity hearing on “ robo - signing, chain of title, loss mitigation and other issues in mortgage servicing, ” november 18, 2010. potential buyers a forthcoming decline in neighborhood quality. in the end, an overhang of homes awaiting foreclosure is unhealthy for the housing market and can delay a recovery in housing markets and the broader economy. several possible explanations have been suggested for the prominence of foreclosures : the lack of servicer capacity to execute modifications, purported financial incentives for servicers to foreclose rather than modify, what until recently appeared to be easier execution of foreclosures relative to modifications, limits on the authority of securitization trustees, and conflicts between primary and secondary lien holders. whatever the merits and relative weights of these various explanations, the social costs of this situation are huge. it just cannot be the case that foreclosure is preferable to modification for a significant proportion of mortgages where the deadweight costs of foreclosure, including a distressed sale discount, are so high. while some banks and other industry participants have stepped forward to increase the rate of modifications relative to foreclosures, many have not done enough. we need renewed attention in many quarters of government and the financial industry, and among investors in mortgage - backed securities, to the lagging incidence of modifications. conclusion in conclusion, i regret to say that the hangover from the housing bubble of this past decade is still very much with us, as revealed both in the inadequate capacity of mortgage servicers and the continued impact of foreclosed homes on the housing market. while bank regulatory agencies can and should respond to specific failings that are being identified in our interagency examination, there is a strong case to be made that broader solutions are needed both to address structural problems in the mortgage servicing industry and to accelerate the pace of mortgage modifications or other loss mitigation

the ongoing need for firms to intensify positive assurance processes and lift investment in systems, processes and compliance. the planned governance thematic review we are conducting with the fma in 2022 will add further light and focus on expectations and practices for board governance. when i joined the bank, i was part of a new internal governors committee, the first step into collective decision - making for monetary policy. subsequently, the government introduced legislation mandating a statutory monetary policy committee, from april 2018. this has proved an excellent development, consolidating collective decision - making and strengthening further transparency and integrity of policy deliberations. the committee has worked well, appropriately testing the bank ’ s analysis and advice and making consensual decisions in the uncertain times. the interaction between monetary policy and financial stability analysis and decision - making has been increasingly close, partly driven by economic forces ( low interest rates, rising house prices and high household borrowing ), and by the evolving practice of the financial policy committee 3 / 6 bis central bankers'speeches directly advising mpc of its financial stability assessment. looking ahead, the bank faces significant governance changes with the board ( comprising 4 - 8 non - exec directors plus the governor ) accountable for all non - monetary decisions. it will take great discipline and skill to make this unique model ( for a central bank ) work and maintain the bank ’ s operational independence, reputation, and effective coordination of decision - making across the mpc, the board and the bank ’ s policy ( e. g. financial stability ) committees. my first speech when i joined the bank was on communication – with the tagline “ i ’ m just a soul whose intentions are good, oh lord, please don ’ t let me be misunderstood ” ( courtesy of the animals ). i must say, somewhat immodestly, that looking back on it, it was rather prescient, or perhaps timeless. as yogi berra was reported to have said “ it ’ s like deja vu all over again. ” for example, i touched on the special challenges of communicating lvr policies and noted that [ the ] extension in regulatory and supervisory responsibilities will demand new channels, new audiences and new messages. ” communicating the objectives of macro prudential and unconventional monetary policies hasn ’ t gotten any easier, but we have been broadening our channels, our audiences, and our story - telling narratives, and will keep doing so. looking ahead i have already touched on some important continuity challenges