FHFA: Foreclosure Abuse Could Have Been Prevented with Better Oversight
For the second time in as many weeks, the Federal Housing Finance Agency (FHFA) inspector general has released a report criticizing Fannie Mae and Freddie Mac, this time stating that the mortgage backers knew about potentially abusive foreclosure practices as early as 2008 but failed to develop risk controls that could have prevented them.
According to the report, allegations first circulated in 2008 that law firms were filing improper foreclosure and bankruptcy reports and charging homeowners inappropriate fees. By the end of 2009, the FHFA had also received consumer complaints alleging inappropriate foreclosure practices involving Fannie Mae loans. In June 2010, FHFA regulators investigated foreclosure processing in Florida amid concerns that the average time for processing a foreclosure increased from 150 days to 400 days.
According to the inspector general’s report, during the Florida visit, FHFA’s acting director was informed that servicers, attorneys, and support staff were overwhelmed by the volume of foreclosures and were not devoting enough time to each case due to Fannie Mae’s fee structure.
As a result, the FHFA developed a checklist for Fannie, Freddie, and their legal teams to follow in foreclosure processes, but the inspector general found no evidence that any action was taken.
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By: Present Value
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