Fannie, Freddie instruct servicers to review foreclosures
Fannie Mae and Freddie Mac will provide instructions to servicers Friday to review foreclosure processes, ensuring each is in compliance with state law. Major lenders and servicers are reviewing foreclosure processes following announcements from Ally Financial, formerly GMAC, and JPMorgan Chase suspended foreclosure sales and cases in 23 states when faulty documentation was detected. Employees at those two companies were signing affidavits without knowledge of the documentation or a notary present. The process is now known as robo-signing. The Office of the Comptroller of the Currency ordered the largest lenders in the country to review its processes, now the government-sponsored enterprises Fannie Mae and Freddie Mac are taking action. "Freddie Mac is deeply concerned about recent reports that there may be affidavits that were improperly executed in connection with foreclosures. The alleged practices in these reports are clearly not in compliance with Freddie Mac's guidelines and directives to its servicers," said Bruce Witherell, chief operating officer for Freddie. According to a letter Freddie sent out Friday, its 2,000 mortgage servicers have until Oct. 18 to complete the review. Terry Edwards, executive vice president of Fannie Mae said the company is disturbed by the reports. "We strongly believe that homeowners who have exhausted all other options and are now facing foreclosure must be treated fairly and equitably," Edwards said. "The steps we are taking today in coordination with our regulator are meant to reinforce these contractual obligations, strengthen the regimen for review and due diligence on the part of servicers, and protect the rights of borrowers facing foreclosure." A spokesperson for Fannie said the company has more than 1,400 approved mortgage companies servicing its loans. The Federal Housing Finance Agency, the regulator of Fannie Mae and Freddie Mac, said the reports raise concerns for homeowners and investors alike. "Where deficiencies have been identified, FHFA has directed the Enterprises to work collectively to develop and implement a consistent approach to address any problems. In addition, FHFA is coordinating with appropriate regulators on this issue," FHFA Acting Director Edward DeMarco said. Write to Jon Prior.