The foreclosure crisis just keeps getting worse. More than 12 percent of residential mortgage loans are in foreclosure or at least one payment past due. Millions of homes have been needlessly foreclosed on because banks have not modified homeowners’ mortgages to affordable levels. On top of this misery, the U.S. Department of Housing and Urban Development’s (HUD’s) funding for counseling to prevent foreclosures has been cut to zero.

Government efforts to hold banks accountable for the “robo-signing” scandal continue.  Last month, federal regulators ordered banks to clean up their mortgage-servicing processes to prevent wrongful foreclosures. Federal and state officials also have proposed that the banks pay $20 billion in penalties. The banks have offered $5 billion, but they object to using the money to reduce mortgage principal amounts.

There may be more news to come on improper foreclosure practices by the banks. A new report shows the HUD Inspector General has found more evidence of wrongdoing:

The audits conclude that the banks effectively cheated taxpayers by presenting the Federal Housing Administration with false claims: They filed for federal reimbursement on foreclosed homes that sold for less than the outstanding loan balance using defective and faulty documents.

If true, these allegations of defrauding the government will not be the first time that taxpayers have been left holding the bag for the banks.  The Congressional Budget Office estimates that the Wall Street bailout cost taxpayers $19 billion.  The federal government may be on the hook for billions more in Fannie Mae and Freddie Mac mortgage guarantees if the foreclosure crisis continues unabated.

The Wall Street financial crisis broke our economy.  More than 14 million Americans are still unemployed today.  We need to make sure that the banks that caused the foreclosure crisis pay their fair share.