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Freddie Mac and Florida foreclosure law firm part ways

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Freddie Mac pulled its cases from a Florida law firm that is under investigation by the Florida attorney general. Freddie Mac spokesman Brad German confirmed Tuesday that Freddie has pulled its cases from the Law Offices of Marshall C. Watson, which represents lenders in foreclosure cases, but said he could not discuss why. The Watson firm said the decision was a mutual one, according to a statement the firm sent to HousingWire on Tuesday. "Freddie Mac and our firm mutually decided to part ways last week," the statement said.  "The Freddie Mac portfolio was only a small portion of the firm’s business, representing less than 10%.  Our firm will continue to work with Freddie Mac in the days ahead to ensure the transition of files is expedited and smooth. We are operating as normal with respect to all other clients and as always remain focused on providing superior service." German said he was unable to comment on the number of cases involved, but said Freddie began pulling its cases "a few days ago." The cases will be moved to other designated counsel firms, he said, but did not specify which ones. The AG investigation began under former AG Bill McCollum and relates to alleged fabrication and presentation of false and misleading documents in foreclosure cases, according to the AG's office. The Fort Lauderdale, Fla.-based Marshall C. Watson firm is one of the largest foreclosure firms in Florida and was among four foreclosure firms targeted by the AG. The investigation has since expanded under AG Pam Bondi to include additional firms. Last fall, McCollum released several sworn statements from former employees at law firms under investigation, detailing alleged improprieties in the way foreclosure cases were being handled, including one from a former lawyer at the Watson firm. Attorneys at the Watson firm allegedly signed affidavits without a notary present, according to a September 2010 sworn statement from Jessica Cabrera, a lawyer there from December 2007 to July 2010. Attorneys at the firm would allegedly sign the documents and send stacks to notaries afterward. This process changed about eight months prior to the sworn statement, according Cabrera, when the firm realized there was a problem and employed roughly 50 notaries to work in-house. At the time, Holly Skolnick, the attorney representing Watson, said the firm was cooperating fully with the attorney general's investigation. Last fall, Fannie, Freddie and Citigroup (C) stopped referring foreclosure cases to the Law Offices of David J. Stern, also a subject of the AG investigation. Earlier this month, Stern's publicly traded arm, DJSP Enterprises (DJSP), announced in a regulatory filing that the Stern firm would cease handling foreclosure cases in Florida at the end of the month. Write to Kerry Curry. Follow her on Twitter @communicatorKLC.

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