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2006 Fannie Mae Report Gave Early Foreclosure Warnings

In an internal report back in 2006, Fannie Mae gave early warning of abuses in the handling of foreclosures by lenders and their law firms. This report came long before regulators had launched investigations into potentially unethical or illegal practices in the mortgage industry. According to the report, Florida foreclosure attorneys "routinely made" false statements in court in an attempt to quickly process foreclosures. Though the report found no evidence that borrowers were improperly placed in foreclosure, it brought up important questions as to whether mortgage servicers or other entities had the legal standing to foreclose in the first place.

A spokeswoman for the now government-controlled agency stated, "Fannie Mae took the necessary steps to address the specific issues identified by the 2006 report and regularly evaluates and enhances oversight of its retained attorney network." Fannie Mae was taken over by the government in 2008 when loan losses soared, costing taxpayers $134 billion.

Recently, state and federal officials have launched begun investigating whether banks and foreclosure law firms used fraudulent or incomplete paperwork to improperly seize homes. Fannie Mae severed ties with two firms in Florida as the result of concerns over the manner in which these firms pursued foreclosures. Some U.S. banks now face the prospect of a multi-billion dollar settlement with state and federal officials and have temporarily frozen foreclosure proceedings to review their processes. Government officials are looking to establish new rules for the mortgage lending industry, and the 2006 report may contribute to the argument that stronger regulation is needed.

At the time of the Fannie Mae report 5 years ago, national foreclosure levels were relatively low. Florida is now recognized as a hot spot for foreclosure-related problems, and the state's top prosecutor is currently investigating several law firms regarding their handling of foreclosures.

If you are faced with foreclosure or are dealing with any financial crisis and are looking for experienced counsel, you can turn to an attorney at Jacoby & Jacoby. The firm represents homeowners and borrowers throughout Long Island in bankruptcy and foreclosure defense.

Contact a Long Island bankruptcy lawyer at the firm today to discuss your case, your questions and your concerns.

Categories: Foreclosure
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