Fannie, Freddie Said to End Lawyer Networks Amid Mortgage Woes
Fannie Mae and Freddie Mac will phase out their foreclosure attorney networks in the wake of the so-called robo-signing scandal, the companies’ regulator said.
The Federal Housing Finance Agency directed the companies to transition to a system that allows mortgage servicers to select their own law firms for processing defaults and foreclosures, rather than relying on a pool of attorneys designated by Fannie Mae or Freddie Mac.
The move is in line with an ongoing effort to establish uniform foreclosure processes at the two companies, the FHFA announced in a press release.
Fannie Mae currently requires mortgage servicers handling its loans to use its Retained Attorney Network for foreclosures and bankruptcies. Some of those lawyers have been accused by lawmakers, regulators and consumer groups of mishandling paperwork for evictions and foreclosures, including falsifying signatures on court affidavits. The dispute led many mortgage servicers to suspend foreclosure activity last year.
In a September report, the FHFA’s Office of Inspector General found that Fannie Mae did not monitor the conduct of its 191 network law firms.