Fannie Mae promises to keep families in homes, but instead pressures banks to foreclose

In early December, a senior executive at Fannie Mae assured members of the Senate Banking Committee in Washington that the mortgage giant was doing everything possible to address the foreclosure crisis.

“Preventing foreclosures is a top priority for Fannie Mae,” Terence Edwards, an executive vice president, told the panel. “Foreclosures hurt families and destabilize communities.”

But confidential documents obtained by the Free Press show that Fannie Mae has pushed an agenda at odds with those public assurances.

The records cover Fannie Mae’s foreclosure decisions on more than 2,300 properties, a snapshot from among the millions of mortgages Fannie handles nationally. The documents show Fannie Mae has told banks to foreclose on some delinquent homeowners — those more than a year behind — even as the banks were trying to help borrowers save their houses, a violation of Fannie’s own policy.

Key documents

Last summer, Fannie Mae executives decided the mortgage giant was “suffering delays in the processing of its foreclosures.”

These documents reveal how Fannie Mae addressed those delays, including a letter to GMAC Mortgage spelling out its new policies to assess compensatory fees and require banks to get its written permission to delay foreclosure sales on loans more than 12 months in arrears. The records also include letters to six lenders setting performance goals for the third quarter of 2010.

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