Several House Democrats slammed Fannie Mae this week over reports that, in Florida, the mortgage finance giant has hired experts at expediting foreclosures to run programs designed to prevent them.
"In other words, Fannie Mae seems to specifically delegate its foreclosure avoidance obligations out to lawyers who specialize in kicking people out of their homes," Democratic Reps. Barney Frank (Mass.), Alan Grayson (Fla.) and Corrine Brown (Fla.) wrote Friday to Fannie CEO Michael Williams.
Furthermore, some of those same "foreclosure mills" — legal firms hired by mortgage servicers to expedite foreclosures — are under investigation for fraud and backdating documents, the lawmakers note, citing recent news reports.
The lawmakers want Fannie, "at the very least," to cut ties with those firms under investigation.
“Why is Fannie Mae using lawyers who are accused of regularly engaging in fraud to kick people out of their homes?" the lawmakers asked.
Florida has been among the states hit hardest by the foreclosure crisis that followed the bursting of the housing bubble in 2008. In August, foreclosure papers were filed on almost 57,000 residential properties statewide — activity that included more than 12,000 repossessions, according to RealtyTrac, an online foreclosure database. Only Nevada fared worse.
In Friday's letter, the Democrats urged Fannie to establish strict new rules allowing mortgage servicers to foreclose on homes "only when its legal entitlement to foreclose is clearly documented."
A Fannie representative told The Washington Post Friday that the company "will respond to the questions raised."