Fannie Mae Knew of Law Firm Foreclosure Abuses as Early as 2003, Report Says
Mortgage giant Fannie Mae knew of abuses by foreclosure mill law firms as early as 2003, but was slow to address the problem, according to an inspector general’s report.
Fannie Mae assigned outside counsel to investigate in 2005 after a shareholder reported abuse allegations in December 2003, according to the report (PDF) by Inspector General Steve Linick of the Federal Housing Finance Authority. The New York Times has a story.
One of the firms on the agency’s roster of retained attorneys was the David J. Stern firm in Plantation, Fla., which collapsed earlier this year after it was fired by Fannie Mae. At one time, the firm was handling 75,000 foreclosures a year.
The review of abuse allegations by the outside law firm concluded in 2006 that “foreclosure attorneys in Florida are routinely filing false pleadings and affidavits.” The law firm also found that Fannie Mae did not take steps to ensure the quality of its foreclosure attorneys’ conduct.
Fannie Mae spokeswoman Amy Bonitatibus told the Times that the 2006 legal analysis concerned lost-note affidavits, and the company immediately addressed the problem.
But Fannie Mae and its overseer, the FHFA, were slow to act after more evidence pinpointed problems, the report says. They did not address allegations about law firm foreclosure mills surfacing in the media in 2008, nor did they address consumer complaints in 2009, Linick’s report said. The FHFA finally initiated a comprehensive review after more media reports in August 2010.