FDIC chair calls for foreclosure claims commission

Consumers who had their homes improperly foreclosed by major banks may be able to receive compensation soon from a new commission.

Sheila Bair, the chairman of the Federal Deposit Insurance Corporation, suggested this idea this week and said that, if enacted, the agency would respond to claims and pay out settlements to those who were harmed financially by these actions.

Bair says the new committee would need to be set up in a similar manner as those for victims of the BP Oil Spill and 9/11, according to a report by Fox Business.

In recent months, major banks have faced criticism for sloppy paperwork that led to the improper evictions of many struggling homeowners across the country.

“Such a settlement should prohibit foreclosure sales when a loan is in loss mitigation, except in specific situations where delay would disadvantage the investor, violate existing contracts, or reward a borrower acting in bad faith,” Bair said in a speech to mortgage bankers in Washington, D.C.

However, Bair acknowledged the proposal would likely face criticism from mortgage companies. She did not reveal a timeline for when the commission would be formally constructed.