Fannie Mae was told about foreclosure abuses by an investor as early as 2003. The concerns were backed up in a 2006 report commissioned by Fannie that found “foreclosure attorneys in Florida are routinely filing false pleadings and affidavits.”

“It is axiomatic that the practice is improper and should be stopped,” the 2006 report said. “Fannie Mae has not authorized this unlawful conduct.”

But, if it’s too expensive to fix…

Well, we all know how that turned out…


Fannie Mae sticking with fired Florida law firm

Federal mortgage backer Freddie Mac fired a Florida law firm this year for “foreclosure processing abuses,” but sister company Fannie Mae continues to use the firm because it’s too expensive to transfer files to new attorneys.

A Federal Housing Finance Agency Inspector General report released Tuesday criticized the two entities for, among other things, a lack of communication about problems within law firms used to take people’s homes.

But, even when Freddie Mac told Fannie Mae why it was firing the Florida firm, Fannie decided to retain the law firm’s services, noting that the cost of moving cases “would be substantial.”

According to the report, Fannie Mae is expecting a $5.5 million bill for transferring files from the Law Offices of David J. Stern to new attorneys. Both Fannie and Freddie fired the Plantation-based Stern firm in November.

The firm Freddie fired but Fannie retained handled 43 percent of Fannie Mae’s foreclosure cases in Florida, the report notes.

While the firm is not identified in the report, Freddie Mac cut ties with the Fort Lauderdale-based Law Offices of Marshall C. Watson in early March.

The Watson firm remains on Fannie Mae’s retained attorney network list.

“The Federal Housing Finance Agency does not have a formal policy or practice to apprise either enterprise of the other’s termination actions,” the report said. “Moreover, Freddie Mac has terminated law firms for poor performance, and Fannie Mae has retained the firms.”

The Watson firm did not respond to a request for comment Wednesday.

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