Illegal Foreclosures: Fannie Mae Knew All Along, But Did Nothing

As early as 2003, Fannie Mae may have known that the Florida attorneys it hired to foreclose on Tampa-area homeowners and others throughout Florida were using falsified information to file foreclosure lawsuits. But, it did nothing to stop the practice.

Fannie Mae claims that it alerted a government official to the illegal practices in 2006, but there is no record of that actually happening. The Federal Housing Finance Agency (FHFA), which regulates and oversees Fannie Mae, was criticized for its own failures in the foreclosure mess in a report by the FHFA Inspector General. In one instance, FHFA alerted Fannie Mae to issues related to illegal foreclosure practices, but never followed up to ensure that Fannie Mae was taking action.

Florida Homeowners Suffer the Consequences of Illegal Foreclosure Practices

While many around Tampa Bay have been struggling with home mortgages, mortgage modifications and foreclosure defense as part of the housing crisis, proper oversight by the FHFA and proper reporting by Fannie Mae could have stopped the abuse of illegal foreclosures. Fannie Mae allowed illegal foreclosures to proceed against Florida homeowners while at the same time taking its share of $160 in federal taxpayer dollars to cover mortgage losses.

Focused on efficiency and speed in foreclosures, Fannie Mae ignored the findings of a 2006 investigation. The investigation revealed the routine filling of false information in Florida foreclosure proceedings by law firms hired by Fannie Mae to foreclose on Florida homeowners. There was no indication that Fannie Mae did anything to stop the illegal Florida foreclosures once it learned of what was going on. Fannie Mae maintained a network of attorneys to foreclose on mortgages, but did not properly prevent foreclosure abuses nor take adequate steps to discover when its law firms were illegally foreclosing on homeowners.

Representative Elijah Cummings, D-Md, called the “systemic failures by FHFA and Fannie Mae to adequately oversee these foreclosure law firms to be a breach of the public trust and an assault on the integrity of our justice system.”

Source: “Feds: Do-Nothing Fannie Mae Knew of Foreclosure Abuses in ’03,” 4 October 2011

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