, Freddie Mac
and Citigroup (C)
have stopped referring foreclosure cases to the Florida Law Firm of David J. Stern
over allegations related to the law firm's business practices.
In a related announcement, publicly traded DJSP Enterprises, Inc. (DJSP)
, also said it is laying off 10% of its staff due to reduced file volumes related to national mortgage lenders who have suspended foreclosure cases in wake of the robo-signing scandal. The Stern law firm is DJSP's principal client.
The law firm is among a few under investigation by the Florida Attorney General's office in an investigation of foreclosure firms
accused of filing foreclosure affidavits that were signed by individuals who didn't review them or that were notarized improperly, among other issues.
Freddie Mac told its mortgage servicers to stop sending cases to David J. Stern's law office Oct. 8 until the government-sponsored enterprise completes an internal review, said Brad German, senior director of public relations.
Fannie Mae suspended new referrals to the firm on Monday, spokesperson Amy Bonitatibus said. The GSE has also retained an independent firm to review the Stern's office processes and address the allegations that have been made by the former employees. Earlier this year, Fannie audited all nine firms that are Fannie approved in Florida, she said.
Citigroup Public Affairs Mark Rodgers also confirmed that the bank is not sending new business to the firm, and said its suspension of business to the Stern office will be in place until the AG investigation is completed.
Jeffrey Tew, a lawyer with Tew Cardenas who represents Stern, declined comment and referred HousingWire to the DJSP press release. In the release, DJSP said the national moratoriums on foreclosure proceedings has affected DJSP's foreclosure, title and REO liquidation divisions.
Sarah Mueller is an editorial assistant with HousingWire.