According to a report recently released by the inspector general for the Federal Housing Finance Agency (FHFA), Fannie Mae ignored indications that its attorneys abused the foreclosure process. The inspector general has actually determined that as early as 2003, legal firms hired by Fannie Mae were engaged in illicit activities. Such activities included, but were not limited to, “robo-signing” and the filing of false documents. In such cases, attorneys allegedly signed their names to filings and affidavits confirming knowledge that they did not actually possess.
The report accuses the FHFA and its prior incarnation, the Office of Federal Housing Enterprise Oversight, of gross negligence in the treatment of these abuses. Even after mortgage borrower complaints were addressed in the media, these oversight agencies failed to take corrective action and Fannie Mae continued to use the abusive law firms.
Countless Borrowers Potentially Affected
The report states that these abuses may have affected numerous borrowers, especially given Fannie Mae’s large customer base. By 2008, the value of loans Fannie Mae backed was more than $3 trillion, amounting to 26 percent of the total mortgage market. However, as the foreclosure crisis became increasingly severe, many of those loans defaulted, resulting in the foreclosure of more than 260,000 borrowers in 2010.
What this report suggests is that many of these foreclosures may have been conducted under less-than-legal circumstances. Fannie Mae, and the FHFA that governs it, now face severe criticism for allowing these problems to continue and affect so many struggling Americans.