Did policies in place at ""Fannie Mae"":http://www.fanniemae.com and ""Freddie Mac"":http://www.freddiemac.com help fuel foreclosure abuses such as robo-signing? That's the question posed by Rep. Elijah Cummings (D-Maryland) to the GSEs' regulator.
[IMAGE]Cummings is the Democratic ranking member of the House Oversight and Government Reform Committee. The nation's housing crisis has been a central focus of his work.
Documents obtained by Cummings show the nation's two largest mortgage financiers assessed $150 million in fines against servicers last year for not processing foreclosures fast enough.
“I am concerned that these penalties, at least some of which were ordered by the Federal Housing Finance Agency (FHFA), may have contributed to widespread abuses by mortgage servicing companies and law firms attempting to meet arbitrary deadlines to expedite foreclosures,†Cummings said in a letter sent to Edward DeMarco, acting director of ""FHFA"":http://www.fhfa.gov.
“The size and timing of these penalties raise serious questions about whether FHFA may be more interested in expediting foreclosures to clear its books than protecting the rights of homeowners,†Cummings said.
In February, Cummings launched his own investigation into what he describes as “abuses and illegal activities by mortgage servicing companies.†The scope of the lawmakers probe encompasses wrongful foreclosures, deficient recordkeeping, inflated fees, and fraudulent lending.
[COLUMN_BREAK]Inquiries from Cummings prompted the FHFA inspector general to take a closer look at allegations of malpractice by private attorneys and law firms hired to process foreclosures for the GSEs. The inspector general focused on Fannie Mae’s contracted network, and the ""results of the internal investigation"":http://dsnews.comarticles/inspector-general-says-fhfa-was-aware-of-robo-signing-and-other-abuses-2011-10-04 were released in late September.
The report concluded that FHFA had knowledge of such procedural abuses as robo-signing and falsified documentation years before these infractions made front-page headlines last fall.
The inspector general said in the reports that ""there were multiple indicators of foreclosure abuse risk prior to 2010 that could have led FHFA to identify and act earlier on the issue.""
The inspector general reported that during this same timeframe in 2010, FHFA directed Fannie Mae to impose compensatory fees against mortgage servicers for violating foreclosure timeline limits.
The directive came even though a June 2010 report from FHFA’s Office of Conservatorship Operations concluded that “servicers, attorneys, and other supporting personnel were overloaded with the volume of foreclosures … documentation problems were evident, and law firms … were not devoting the time necessary to their cases.â€Â
FHFA’s general counsel explained to Cummings that fees are assessed based on each GSE’s allowable foreclosure timelines for individual states. Fannie and Freddie assess servicers a per day fee â€" approximately $30 a day â€" for each day that the servicer exceeds the established timeline.
Cummings is demanding FHFA provide him with a list of all servicers fined for failing to process foreclosures within the GSEs’ specified timeframes, as well as the amount of fees assessed against each servicer and an explanation of why they were penalized. Cummings also wants to know which servicers have paid the fees in full.
Cummings has given DeMarco a deadline of November 30, 2011, to provide the requested information.