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By Dave Clarke and Joe Rauch
November 14, 2010 6:32 PM EST
Banks under fire over their foreclosure practices face twin hearings in Congress this week, at which they will come under renewed pressure to find ways to keep borrowers in their homes.
The hearings on Tuesday and Thursday will include the first appearances by executives from major lenders like Bank of America
Banks are accused of having used "robo-signers" to sign hundreds of foreclosure documents a day, a fiasco that has reignited public anger with banks that received billions of dollars in taxpayer aid during the financial crisis.
Lenders will be pressed on whether the paperwork problems are further evidence that modifying loans is a better alternative to eviction.
"Foreclosure should be the last option and we need to examine barriers to mortgage modifications," Democratic Senator Tim Johnson, expected to lead the Banking Committee next year, said in an emailed response to Reuters.
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Other witnesses at Tuesday's Senate Banking Committee hearing include Iowa Attorney General Tom Miller, who is leading a 50-state probe of foreclosure practices.
Miller's testimony will be closely watched. A settlement with lenders could include fines or commitments to loan modifications.
Bank of America and JPMorgan were among banks that temporarily suspended foreclosures pending internal reviews of their practices, but have since begun to resume sales of foreclosed properties.
Some lawmakers and consumer activists called in October for all lenders to institute a national moratorium on foreclosures, but they failed to gain traction due to fears it would further depress home sales and crimp economic growth.
Real estate data company RealtyTrac said the temporary suspensions by banks led to a 9 percent drop in U.S. foreclosures in October from the month prior.
Republican Representative Spencer Bachus, the front-runner to be chairman of the House Financial Services Committee next year, said the paperwork problems are "disturbing," but singled out federal regulators for criticism.
"It is disappointing that the regulators didn't catch this before the media since most of the problems in the contested foreclosure proceedings occurred at the nation's largest banks," Bachus told Reuters in an email.
The House panel's foreclosure hearing is set for Thursday.
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