Federal Agency Inspector General: Fannie, Freddie Knew Of Dubious Foreclosure Mill Sweatshop Practices & Dragged Feet In Taking Appropriate Action

Housing Wire reports:

• A Fannie Mae shareholder sounded the alarm on foreclosure abuses at law firms handling foreclosures for the government-sponsored enterprises back in 2003, but it took regulators seven years to aggressively tackle the problem, the Federal Housing Finance Agency Office of Inspector General said in a report.



• The report highlights concerns industry insiders had for years about the practices of default servicing firms in a network of firms handling Fannie Mae and Freddie Mac foreclosures.

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• One of the major cases breaking last year involved the Law Offices of David J. Stern, a Florida firm that ended up under investigation for its foreclosure practices. The inspector general's report said, "There were indicators prior to August 2010 that could have led FHFA to identify the heightened risk posed by foreclosure processing within Fannie Mae’s attorney network. These indicators included significant increases in foreclosures, which accompanied the deterioration of the housing market; consumer complaints alleging improper foreclosures; contemporaneous media reports about foreclosure abuses by Fannie Mae’s law firms; and public court filings in Florida and elsewhere highlighting such abuses."

For more, see GSEs knew of foreclosure attorney abuses in 2003: FHFA-OIG.

For the OIG's reports, see FHFA’s Oversight of Fannie Mae’s Default-Related Legal Services (AUD-2011-004, September 30, 2011).