Lawmakers want to see how Fannie, Freddie select REO vendors
Members of the House Financial Services Committee want more information on how Fannie Mae and Freddie Mac contract with companies charged with managing and reselling previously foreclosed homes, known as REO. Rep. Maxine Waters (D-Calif.) introduced an amendment to eight bills on reforming the two government-sponsored enterprises that would require the Federal Housing Finance Agency Inspector General to report on the REO selection process and recommend how to improve it. Waters specifically wants the new reporting to ensure that qualified REO listing agents and vendors have the opportunity to compete for contracts and assignments for properties in their area. The Waters amendment would also require the FHFA IG to report on how the GSEs are ensuring compliance with their servicer guidelines and determine if a borrower was foreclosed upon improperly. The House subcommittee on the GSEs held a hearing Tuesday to mark up the eight bills and hear amendments. The final subcommittee votes on the bills are expected Tuesday afternoon. Waters later withdrew her amendment to work on language with Rep. Judy Biggert (R-Ill.). But several lawmakers from both sides of the aisle agreed that how the GSEs select companies to liquidate REO properties is a major issue concerning the housing recovery and should draw stricter oversight. Local agents have long complained that too many REO listings in their own neighborhood go to nationalized companies and brokers located sometimes as far as 50 miles away. Waters believes local agents "know the market better" and can better serve these neighborhoods. Together, with clearer reports on how the GSEs approve servicers and attorneys, lawmakers Tuesday said the public would have a more complete view of how the foreclosure process works. "We must ensure that the enterprises’ are good stewards of taxpayer funds, and that they are using their tremendous power over the market to incent best practices," Waters said. Write to Jon Prior. Follow him on Twitter @JonAPrior.