By Carla Ghosn, CEO and Founder of Caal (mycaal.com)
An FHFA report states that Fannie Mae became aware as early on as 2003 of foreclosure malpractices perpetrated by law firms that it had employed to get distressed homeowners out of their homes through foreclosure. This report was crafted by its inspector genera, Steve Linick. Despite this knowledge, the federal mortgage finance giant did precious little to address the issue.
It took news reports in 2010 about issues like the submission of dishonest pleadings in bankruptcy courts to finally get Fannie Mae’s regulator to demonstrate any interest in holding these law firms accountable. The FHFA inspector general criticized the agency itself for its failure to take swift action in the face of foreclosure abuses.
The report is the second of its kind in which an FHFA inspector general has pointed out questionable conduct at both the FHFA, as well as at Fannie Mae and Freddie Mac, which fall under its oversight. The intended responsibility of the FHFA is to make sure that the practices of these two mortgage giants do not expose the taxpayers who essentially own them to even more risk than they have had to deal with to date. Taxpayers have already invested involuntarily into these government entities to the tune of $160 billion.
Elijah E. Cummings- chief member of the House Committee on Oversight and Government Reform – requested the report. Cummings has stated that the chronic failure of both the FHFA and Fannie Mae to reign in unethical and unscrupulous law firms amounts to an attack on the soundness of the American justice system as well as a violation of public trust.
It was a Fannie Mae shareholder who informed the organization of instances of foreclosure abuse in 2003. On being made aware of the situation, Fannie Mae appointed external legal aid to probe into the matter, and the legal aid in question determined that the actions of associated law firms were improper, potentially widespread, and needed to be put to an end. According to Linick’s report, it was not possible to determine if Fannie had notified its regulator (at the time, the Office of Federal Housing Enterprise Oversight) about the legal misconduct uncovered by its own investigation.
The inspector general further stated that it seems both Fannie Mae as well as its regulatory body turned a blind eye to additional indications of foreclosure misconduct and abuse. For instance, the FHFA failed to address homeowner complaints regarding inappropriate actions implemented by law firms as far back as the latter part of 2009, knowing full well that foreclosure misconduct represents a significant financial and operational threat to Fannie.
Questionable conduct has been taking place at Fannie Mae practically since it’s take over by the federal government, and the list of shady business dealings has continued for the most part unabated. In the fall of 2010 there was a huge outcry over alleged falsified foreclosure documentation and various other practices that raised red flags, and the FHFA was eventually left with no choice but to embark on official enquiries into the matter. It was found that Fannie Mae lawyers failed to comply with safety and ethical standards. Law firms were expected to report on their own misconduct, and if those reports were not forthcoming, it was assumed that everything was right as rain. Hardly an air-tight judicial protocol, wouldn’t you say?
Since the release of the report, Housing Agency officials have agreed on the need for an overhaul at Fannie Mae with regard to the implementation of regulatory safeguards. Fannie Mae has in turn assured all involved of its commitment to revisit its supervisory practices by the end of September 2012, and so on and so forth, bla bla bla. It remains a case of one housing related debacle after another, and of various ‘regulatory’ bodies having no desire and/or clout to take any definitive step toward securing justice and fairness for the American homeowner.
It is within this unfortunate housing market climate that mycaal.com was created with the intention of giving American borrowers tangible hope with their loan modifications that goes beyond empty promises and broken pipedreams.