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A new report from the Federal Housing Finance Agency says that mortgage giant Fannie Mae knew of abuses in its foreclosure process as early as 2003. According to an Associated Press report, officials at Fannie Mae “knew about allegations of improper foreclosure practices by law firms in 2003 but did not act to stop them.” The practices in question include so-called “robo signing” of foreclosure notices in large volumes. Following a tip from “an unnamed shareholder” in 2003, “Fannie Mae responded by hiring a law firm to investigate the claims in 2005. The law firm reported in 2006 that it had found foreclosure attorneys in Florida ‘routinely filing false pleadings and affidavits.’ “ The report [PDF], issued by the FHFA inspector general, notes that “Fannie Mae did not take steps to ensure the quality of its foreclosure attorneys’ conduct, the legal positions taken in the attorneys’ pleadings, or the manner in which the attorneys processed foreclosures on the Enterprise’s behalf.” The report also implies that Fannie Mae officials may not have alerted the proper authorities about the problems as they were uncovered. However, according to Politico, “Officials at Fannie Mae said they informed a government official about the firm’s findings in 2006. . . but the official said he doesn’t remember the conversation.” The inspector general goes on to recommend that the FHFA (which has supervisory authority over Fannie Mae) take both specific steps to address the issues related to the foreclosure process and general actions to improve oversight of the mortgage lender. FHFA is given a September 2012 deadline for fixing the problems at hand. See also: “The Survivors (So Far),” CorpCounsel, August 2011.

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