Kim Miller, Palm Beach Post
Federal mortgage giant Fannie Mae was told in 2006 about faulty court documents filed by Florida foreclosure attorneys acting on its behalf, but did nothing to correct the practices, an inspector general found.
A report issued Friday by the Federal Housing Finance Agency Office of Inspector General said an outside law firm hired by Fannie Mae to investigate allegations of wrongdoing confirmed “unlawful” practices and stated that foreclosure attorneys were sacrificing accuracy for speed by filing false documents.
After learning of the attorney misconduct in 2006, Fannie Mae failed to make any improvements in its oversight of the firms.
“Strengthened law firm oversight by Fannie Mae could have detected – if not prevented – these abuses by attorneys,” the report states.
Florida foreclosure defense attorneys agreed, pointing to the morass that followed last fall’s revelation of robo-signed documents and other faulty paperwork, some of which was produced by Florida’s so-called “foreclosure mills.”
“If action were taken sooner we would have avoided a lot of this instead of muddying up the public land records in tens of thousands of cases,” said attorney Tom Ice, of Ice Legal in Royal Palm Beach. “It goes without saying that if someone did something to stop the fraud, it would have benefited everyone.”
Fannie and Freddie Mac buy loans from banks and sell them to investors, providing guarantees to cover losses when loans default. They were taken over by the government in 2008.
