These included introducing foreclosure checklists for its attorneys to follow revising the compensation it paid attorneys to give them incentives to improve speed and effectiveness and to penalize poor performances and engaging with lawyers and mortgage servicers to reduce lost paperwork and other problems. In 2010, FHFA recommended several steps that Fannie could take to curb abuses. In 2006, a New Jersey judge found that attorneys acting for Fannie filed 250 motions for permission to seize homes that were signed by an employee who had not worked for the firm for more than a year.įHFA itself, which took over the supervision of Fannie in July 2008, also failed to make sure that Fannie was properly supervising its attorney network, according to the new inspector general's report. Mortgage help for unemployed disappearsīut a June 2010 field visit to Florida by Fannie staff found that its attorney network there was so overwhelmed by foreclosure volume - and the flat fees paid to them by Fannie were so inadequate - that the firms could not devote the time needed to process the documents properly and often took shortcuts.
WHO HANDLES FANNIE MAE FORECLOSURES FULL
are routinely filing false pleadings and affidavits."Ī Fannie Mae spokeswoman declined to comment on the full report, but confirmed that the 2006 investigation identified a specific issue with the practice of filing lost note affidavits, which she said was immediately addressed. In 2006, an internal report from that probe concluded that "oreclosure attorneys. A Fannie shareholder alerted the company back in December 2003 that its attorneys may have engaged in abusive practices in Florida, and the agency hired an outside firm to investigate. "It appears that an untold number of borrowers with loans owned or guaranteed by Fannie Mae may have suffered abuses that violated their legal rights," said Cummings.įannie should have known the problem existed. In 2010, Fannie foreclosed on more than 260,000 borrowers. By 2008, when it entered conservatorship after suffering large losses in the mortgage meltdown, the value of loans it backed exceeded $3 trillion - 26% of the total mortgage market.Īs the foreclosure crisis deepened, many of those loans defaulted. The abuses likely affected many borrowers, given Fannie's huge footprint in the mortgage market. In a letter to FHFA, Elijah Cummings, ranking member of the House Committee on Oversight and Government Reform who requested the report, called the failures "an abuse of the public trust and an assault on the integrity of our justice system." Foreclosures rise in August "If a law firm self-reported no issues as it processed cases," the inspector general said, "then Fannie Mae presumed the firm was doing a good job."
Even after mortgage borrower complaints were raised in the press, the inspector general said FHFA and the agency it replaced, the Office of Federal Housing Enterprise Oversight, failed to take adequate corrective action and Fannie continued to use the law firms blamed for the problems.
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