Fannie Mae and Freddie Mac fed document problems and ignored warning signs on law firms in a quest to speed up foreclosures, the Washington Post reports. The paper said the companies, now run by the government, “shaped the practices being challenged in courtrooms around the country.”
Fannie Mae and Freddie Mac, the biggest purchasers of home loans, were taken over by the government in September 2008 during the financial crisis and have cost taxpayers $130 billion. The Post said the companies pushed for fast foreclosures, paid outside firms based on how many foreclosures they did, and worked with a law firm that engaged in “legally questionable practices.”
The Post, quoting documents and industry sources, said Fannie Mae and Freddie Mac threatened outside companies with penalty fees if foreclosures took too long and sent the firms ratings comparing their foreclosures times with other firms. During a deposition, a Fannie Mae official was asked if there were any safeguards in place to ensure that outside firms followed the law.
The Post reported she answered, “I don’t know of any policies and procedures.”
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