Since regulators began investigating the mortgage industry's practices, it seems Fannie Mae was warned of the foreclosure mishandling before things hit the fan, according to a report.
The report indicates that attorneys made false statements in court in order to expedite the foreclosure process, and that some entities may not have even had the legal standing to foreclose.
According to a spokeswoman for Fannie Mae, the specific issues outlined in the report have been since addressed with new measures put into place as well.
An inquiry is being made by federal and state officials to determine if any foreclosure agencies have improperly seized homes by the use of mishandled, incomplete, or even fraudulent paperwork.
Many have been calling for stronger regulation of mortgage servicers; the report may provide the needed fuel to encourage officials to establish new rules for the industry. These suggested new rules that will create guidelines to not only protect the borrower but to protect the financial market as a whole.
It's being argued that with the proper oversight these issues could have been uncovered and corrected while they were still manageable and before they cause reprehensible damage.
Other issues that the foreclosure report raised included improper legal tiling by attorneys and practices regarding the electronic lien registry established by the industry to enhance filing efficiency and save money. What this means is that they were illegally using unqualified leads to get some of the paper work processed.
Fannie Mae's own legal department believed that foreclosure attorneys may have been cutting corners in order to save money and would misrepresent original loan documents as being lost in lieu of tracking them down at cost.
Therefore, Fannie began to require law firms to inform them of each filing of lost notes. This was their way of covering their own mistakes. It is a shame that their foreclosure attorneys would even try to get these sorts of things done. They had no problem with making that extra money at the expense of the American people.
Fannie has since cut ties with many these law firms after conducting its own inquiries and finding questionable practices regarding their handling of many of their documents.
At the report's release, on the nationwide level, foreclosures were relatively low. The practice of robo-signing was not specifically addressed (the signing of documents without proper and full review). But we know that the practice of robo-signing was a major factor in all of this foreclosure mess.
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