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Fannie Mae terminates relationship with Florida law firm Ben-Ezra & Katz

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[Update 2: Corrects original version of story that wrongly said Fannie Mae pulled work from four law firms. Fannie Mae pulled work from the Law Offices of David J. Stern. However, Fannie Mae didn’t pull work from the offices of the Law Office of Marshall C. Watson of Fort Lauderdale, Shapiro & Fishman in Boca Raton or the Florida Default Law Group in Tampa.] Fannie Mae has terminated its relationship with Florida-based foreclosure default law firm Ben-Ezra & Katz, P.A., according to a notice sent to mortgage servicers Thursday afternoon. The government-sponsored enterprise advised its mortgage servicers to move Fannie Mae matters to other law firms within its retained attorney network. Fannie Mae said it became aware of certain document execution issues at the Ben-Ezra law firm regarding its processing of foreclosure cases on the agency's  behalf. "We have terminated the firm. It is our expectation that law firms will handle matters in strict compliance with proper procedures, ethical codes of conduct and legal requirements," a Fannie Mae spokesperson said in a statement. "In instances where we have reason to suspect that a firm may not be doing so, we will immediately engage and take appropriate action." In the guidance issued late Thursday afternoon, Fannie Mae said any matters concerning the agency that are being handled by Ben-Ezra must be transferred to a different law firm by Feb. 15. Fannie Mae mortgage servicers are advised to:
  • refer any foreclosure matters currently held with Ben-Ezra that have not been legally enacted to another attorney firm within Fannie Mae's Retained Attorney Network in Florida
  • notify Fannie Mae on the transfer location of these cases, and
  • notify the new law firm of the transfer
  • immediately suspend all payments outstanding to Ben-Ezra
The Ben-Ezra law firm said it is both disappointed and surprised by Fannie Mae's decision, since the issues leading to the agency's action are based on discrepancies the firm discovered internally, the firm said in a statement. The Ben-Ezra firm says it then proactively informed Fannie Mae about its plans to correct the problem, the statement said. "There is no issue of whether the information in the affected files is correct," Ben-Ezra said in a statement. "No homeowner has been hurt because of this. These are technical paperwork issues — not a question of whether filing the foreclosure was appropriate." Several Florida law firms have been under scrutiny since the robo-signing scandal broke in October. Late last year, Fannie Mae pulled business away from the Law Firm of David J. Stern in Plantation for alleged document process irregularities, as well. The Florida state Attorney General's office has also said it is investigating three other law firms: the Law Office of Marshall C. Watson of Fort Lauderdale, Shapiro & Fishman in Boca Raton, and the Florida Default Law Group in Tampa. None of these firms has been accused of any wrongdoing in the investigation. Write to Christine Ricciardi. Follow her on Twitter @HWnewbieCR.

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