Lawsuit wave could hurt housing market: FDIC chief

WASHINGTON — A top banking regulator says a wave of lawsuits from troubled borrowers who lost their homes to foreclosure could hurt the already-ailing housing market.

Sheila Bair, chairman of the Federal Deposit Insurance Corp., says litigation by the affected homeowners "could ultimately be very damaging to our housing markets" because it could keep people from buying foreclosed homes.

Bair says her agency is working closely with other federal regulators to determine whether mortgage companies used flawed documents to seize homes. She says eventually a "global solution" will be needed. It could involve mortgage companies assigning priorities to foreclosures and possibly allowing them to proceed if properties are vacant.