Fannie, Freddie paid $50 million in fees to Florida law firms under investigation
Fannie Mae and Freddie Mac combined paid nearly $50 million in legal fees to foreclosure law firms that are now under investigation by the Florida attorney general for possible malpractices, according to data sent to HousingWire by U.S. Rep. Randy Neugebauer (R-TX).
Neugebauer, chairman of the House financial services subcommittee on oversight and investigations, launched an investigation into the legal fees paid for by Fannie Mae and Freddie Mac in defense of officials who led the organizations before and during the financial crisis. The New York Times obtained the information on Monday.
Since the two government-sponsored enterprises were taken into conservatorship in September 2008, they have spent a combined $410.7 million in legal fees alone with $148 million from Fannie and $59 million from Freddie. By comparison, Fannie and Freddie spent $120.8 million in legal fees in the four years leading up to conservatorship.
When employees at major mortgage servicers were found to be signing foreclosure affidavits en masse and without a proper review of the documentation last October, many law firms were ensnared in the robo-signing scandal as well.
Fannie, Freddie and Citigroup ($50.52 -0.01%) pulled business away from the Law Firm of David J. Stern after it and three others in the state – the Law Office of Marshall C. Watson in Fort Lauderdale, Shapiro & Fishman in Boca Raton, and the Florida Default Law Group in Tampa – came under investigation from then Florida AG Bill McCollum.
Freddie had spent $46 million and Fannie spent $2.2 million in legal fees to Florida firms. A spokesman for Neugebauer's office said the investigation did break down which firms got what, but that the numbers were not immediately available.
Since conservatorship, Fannie paid $24 million in legal fees in defense for former CEO Frank Raines ($7.9 million), former Chief Financial Officer Tim Howard ($4.5 million) and former Controller Leanne Spencer ($11.8 million), according to the data.
Neugebauer said he plans to investigate other activities occurring within Fannie Mae and Freddie Mac that could cost taxpayers.
"This drain on the American taxpayer must be plugged as quickly as possible," Neugebauer said.
Fannie and Freddie did not immediately reply to requests for comment.
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