As Florida’s top prosecutor continues to investigate the state’s law firms for improper foreclosure work, a report has surfaced showing Fannie Mae was warned in 2006 of abuses in the way lenders and their law firms handled foreclosures, according to the Wall Street Journal.
The fraud-closure problem that’s been snow-balling could have been minimized, if only the government paid attention to documented reports!
This internal report, produced years before regulators began investigating the mortgage industry’s practices, said Florida foreclosure attorneys “routinely made” false statements in court attempting to process foreclosures more quickly.
The report said Fannie Mae officials “believe foreclosure counsel are sacrificing accuracy for speed” but did not name any firms, the Journal said.
How ironic that the government has essentially known of the fraudulent, illegal practices of banks and the mortgage industry for five years, and is still trying to fix these catastrophic wrongs. Essentially, this equates to fraud, perpetuated by the idea that you can privatize profits and socialize losses.
And apparently this is what you get when the fox is asked to clean up the hen house.
It is also interesting to note that after the government took complete control of Freddie and Fannie in 2008 amid soaring loan losses, Florida foreclosure filings soared to unprecedented levels. This report proves that the government is to blame for our real estate debacle as much, if not more, than the banks who have taken the brunt of America’s scorn for years.
Fannie Mae has been under investigation since September 2008 for its role in the mortgage crisis, but more recently, federal and state officials have been looking to see if banks and foreclosure law firms have improperly seized homes by using fraudulent or incomplete paperwork.
Two red flags raised by the report, which was produced at a time when national foreclosure numbers stood at relatively low numbers, include improper legal filings by foreclosure attorneys and questionable practices surrounding the Mortgage Electronic Registration Systems, an electronic-lien registry set up by the mortgage industry to reduce paperwork and lower costs.
According the Journal, the report said, “foreclosure attorneys may be taking short cuts by misrepresenting that [original loan documents] are lost.” Nearly a year ago, Oppenheim Law wrote about the Florida Supreme Court was working to end the abusive practice of banks filing a foreclosure based on a “lost note.”
Over and over again, homeowners have been subjected to foreclosure proceedings when banks and the government knew full well there was no ground to foreclose. It is appalling that the government had knowledge of these practices and still allowed gross infringements of Americans’ Constitutional right to due process.
Referring to the industry in general, Elizabeth Warren, the White House adviser in charge of establishing the new Bureau of Consumer Financial Protection, said that with proper oversight, “the problems in mortgage servicing would have been exposed early and fixed while they were still small.”
A month ago, Oppenheim Law asked, “Why isn’t Wall Street in Jail?” After today, it looks like the banks should be sharing a cell with the feds.