According to a government report, Fannie Mae knew in 2003 that law firms it hired to foreclose on homes were abusing their authority. That’s seven years before knowledge about the problems became widespread. The Federal Housing Finance Agency inspector general released a report that leveled the allegations, also blaming the agency he works for, which is tasked to oversee government-controlled Fannie Mae and Freddie Mac.
According to The New York Times, the report says Fannie Mae did little to stop attorneys from filing false pleadings in foreclosure actions in bankruptcy court. When the FHFA brought up the problems to Fannie Mae, the agency messed up by not asking for a response.
Because the law firms were paid according to the number of foreclosures they were able to muster, attorneys allegedly used unethical means to drive up their numbers. The report says the FHFA needs to step up its oversight to prevent future foreclosure abuses.
Fannie Mae Knew Early of Abuses, Report Says [The New York Times]