Letter from Rep. Alan Grayson, Rep. Barney Frank, and Rep. Corrine Brown to Fannie on Foreclosure Mills

September 24, 2010

Michael J. Williams
President and Chief Executive Officer
Fannie Mae
3900 Wisconsin Avenue, N.W.
Washington, D.C. 20016

Dear Mr. Williams,

We are disturbed by the increasing reports of predatory ‘foreclosure mills’ in Florida working for Fannie Mae servicers.  Foreclosure mills are law firms representing lenders that specialize in speeding up the foreclosure process, often without regard to process, substance, or legal propriety.  According to the New York Times, four of these mills are both among the busiest of the firms and are under investigation by the Attorney General of Florida for fraud.  The firms have been accused of fabricating or backdating documents, as well as lying to conceal the true owner of a note.

Several of the busiest of these mills show up as members of Fannie Mae’s Retained Attorney Network, a set of legal contractors on whom Fannie relies to represent its interests as a note-holder.  The network also serves as a pool of legal talent that represents Fannie in its pre-filing mediation program, a program designed to facilitate communication between borrowers and servicers prior to foreclosure. 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.

The legal pressure to foreclose at all costs is leading to a situation where servicers are foreclosing on properties on which they do not even own the note.  This practice is blessed by a legal system overwhelmed with foreclosure cases and unable to sort out murky legal details, and a set of law firms who mass produce filings to move foreclosures as quickly as possible.  At the very least, we would encourage you to remove foreclosure mills under investigation for document fraud from the Fannie Mae’s Retained Attorney Network. We also believe that Fannie should have guidelines allowing servicers to proceed on a foreclosure only when its legal entitlement to foreclose is clearly documented.  In addition, these charges raise a number of questions for us about the foreclosure process as it pertains to Fannie Mae’s holdings.

Why is Fannie Mae using lawyers that are accused of regularly engaging in fraud to kick people out of their homes?  Given that Fannie Mae is at this point a government entity, and it is the policy of the government that foreclosures are a costly situation best avoided if there are any lower cost alternatives, what steps is Fannie Mae taking to avoid the use of foreclosure mills?  What additional steps is Fannie Mae going to take to ensure that foreclosures are done only when necessary and only in accordance with recognized law?  How do your servicer guidelines take into account the incentives for fraud in the fee structure of foreclosure attorneys and others engage in the foreclosure process?  What mechanisms do you employ to monitor legal outsourcing?

We look forward to your responses and to understanding more about these disturbing dynamics in future hearings.

Sincerely,

Alan Grayson
Member of Congress

Barney Frank
Member of Congress

Corrine Brown
Member of Congress

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4closureFraud
1-561-880-LIES

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Letter from Rep. Alan Grayson, Rep. Barney Frank, and Rep. Corrine Brown to Fannie on Foreclosure Mills


Comments
8 Responses to “Letter from Rep. Alan Grayson, Rep. Barney Frank, and Rep. Corrine Brown to Fannie on Foreclosure Mills”
  1. John says:

    It all sounds good and I applaud their help, but the banks have all the resources, lobby, and ear of the courts. Judge at their request denies all your points covered on this site, doesn’t matter, all denied!

    Deutch bank got mine. Hard to beat them. If they need more money to fight you, the government will give it to them.

    I fear for our country. Every country in history that had the government turn against the people went down hard.

    God save us!

  2. Jeff Horner. says:

    Firstly, let me say that I hope their letter bears some real fruit, but quite honestly I am very skeptical that it will, I think the best results we can hope to get from it is a nice, lengthy letter back from Michael J. Williams stating words to the effect that much is being done in the areas of concern etc, etc, blah, blah, so on and so on ad nauseum.

    With regard to home loan modifications, They are a joke, especially in terms of them alleviating any real pressure from the home owner. 99.9% of those who are successful enough to qualify for a Loan Modification in the first place are back in their original predicament a few short months later. The benefits that their new loan modification provide are so small and insignificant that no real pressure has actually been removed from the home owner. The home loan modification programs are for the benefit of the mortgage company only, they are a tool designed to close and eliminate discrepancies in your original loan documents that are detrimental to the mortgage company.

    Once a new loan modification is agreed to and in place, the reality is, the home owner is much worse off than before the modification. HERE”S WHY, You need to pay close attention to what I have to say next… Many of the original loan documents contained NEWLY DISCOVERED fraudulent & illegal flaws, Flaws and illegalities that are to the homeowners benefit if they choose to fight their existing mortgage the way it has been prepared.

    In most instances, the homeowners mortgage has been paid off by a series of events that have taken place since its inception. Example, Your mortgage has been sold either in whole or in part to pools of local and foreign investors. Your original lender has been paid out in full by these outside investors of which you have NO FINANCIAL DEALINGS OR OBLIGATIONS TO. You were obligated to pay the original lender only, not anyone else. Since they have been paid out you have no further obligation to anyone else.

    In most cases your original mortgage servicer is still being used to collect your payments, which leads the homeowner to believe that the Servicer is the owner and lender in due course of their mortgage and Note which it is not. Check your mortgae document, it more often than not states that you will continue with the present servicer, it does not say you are obligated to pay any new investor.

    In addition to the above example. Again, your mortgage debt has been paid off for you by the very system that was supposed to make money for the system. Because of this flaw in the ORIGINAL PREPARATION IN YOUR MORTGAGE DOCUMENT LANGUAGE, Freddie Mac, Fannie Mae and banks alike, along with other mortgage investors are scrambling to have this blatent defect corrected through new loan modifications.

    Once a home owner involves themselves in a supposedly helpful new loan modification, they have immediately destroyed any defenses that their original FLAWED loan documents gave them, the lenders know this, which is why under the guise of being helpful and understanding, they insist that all new loan modifications REQUIRE NEW LOAN DOCUMENTS TO BE COMPLETED AND SIGNED BY THE HOME OWNER. These NEW loan documents do not contain any of the beneficial flaws and clauses to the home owner that the original ones did.

    If the lender is so GENUINELY (cough) intent on providing assistance to you, then tell them that you will agree to a new loan modification under the original terms and conditions stated in your original mortgage, all they have to do is create an addendum and change the loan amount and adjust to a new payment schedule, all other terms and conditions are to to remain the same.

    Of course they will not do this and now we all know the reason why, But guess what? You are in the drivers seat, let them start foreclosure against you, better that you take the lesser of two evils by trying to find the money to pay for an attorney famillier in foreclosure law, than lose your home and then have to come up with an up front minimum of three months payments to find a new home, rented or otherwise. Not to forget of course all of the trauma, anguish and upset that comes from being uprooted from your home.

  3. Equity Free says:

    Write, fax, call, e-mail all your elected officials, include candidates for office also . We are finally getting some national media exposure . We need to turn up the heat , to gain some ground . The mills are still cranking out
    the docs, that are foreclosing at a record pace . One of the reasons that this news is now in major media and
    has the attention of congress .
    Their implicit guarantee went out with the garbage, where it belongs . Stopping the foreclosures, will stop this economic crises, and would go a long way in rewarding good faith and honesty . Something that has been run over by greed is good mentality .
    Keep making waves .
    Thanks to all of you for all you do .

  4. e.s. says:

    thank you Mr Grayson……….. but Barney Frank?????
    I can’t believe that he is backtracking, when in actuality, he looked away, and in most cases aided this mortgage mess…

    In any regard, it is good to see something coming out of this, by which VICTIMS of FRAUD can possibly be VINDICATED…. but I am nervous that with Barney Frank involved, there may be only slight assistance while more covers are placed on the situation to shield those at fault from being incarcerated.

    WE AS VICTIMS OF FRAUD ARE NOT INTERESTED IN HAVING OUR LOANS MODIFIED… if it was WRONG from inception, IT CAN NEVER BE RIGHT!

  5. Phyllis says:

    Corrected email address

    Bravo! Grayson, Frank and Brown, It does not make sense to me to foreclose on a home because owner cannot pay on inflated market price of mortgage when you can keep them in the home if it is refinanced at current market price. Owners keep up neighborhoods and property and pay taxes, banks leave homes to deteriorate and neighborhoods to become slums. Putting ppl in shelters, living in cars and on street does not contribute to community, children’s lives or the future of this country. Keeping neighborhoods and families together will eventually pay bigger dividends than foreclosures.

  6. Phyllis Herman says:

    Bravo! Grayson, Frank and Brown, gov’t should not use firms w/ fraudulant records. Foreclosed ppl have enough problems without further obstacles. It does not make sense to me to foreclose on a home because owner cannot pay on inflated market price of mortgage when you can keep them in the home if it is refinanced at current market price. Owners keep up neighborhoods and property and pay taxes, banks leave homes to deteriorate and neighborhoods to become slums. Putting ppl in shelters, living in cars and on street does not contribute to community, children’s lives or the future of this country. Keeping neighborhoods and families together will eventually pay bigger dividends than foreclosures.

  7. Michael says:

    About time!!!

    One other question you may want to ask: Since a home can only be sold for Fair Market Value — by definition never more — how could it ever make sense to foreclose when the person in the home can afford the current fair market value of the home? That is, even if a foreclosed home brought the same price as a non-foreclosed home (they don’t, but we’ll ignore that), the costs of foreclosure still make the foreclosure more costly than just refinancing at fair market value … and the taxpayers are footing the bill.

    Doesn’t the foreclosure just force the US Treasury to borrow money, that will have to be repaid by taxing the children being evicted when they grow up, to cover losses that are larger than they should be?

    Members of Congress … do everybody a favor; cut them off. Fannie and Freddie want to pretend that they’re private: show them what happens to private companies who take on $900 billion of garbage liabilities. If they talk about the “implicit guarantee” tell them there was also one between the borrower and their bank, and that the US is going to start treating those implicit guarantees equally … they’re going to ignore it.

  8. Alina says:

    Woo Hoo !!!! Thank you Representative Grayson, Representative Frank, and Representative Brown.

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