Fannie, Freddie to phase out foreclosure attorney networks
The Federal Housing Finance Agency directed Fannie Mae and Freddie Mac to phase out their current foreclosure attorney networks and to develop new criteria, allowing mortgage servicers to choose their own lawyers in the future. Currently, the government-sponsored enterprises designate specific law firms eligible to do foreclosure work for servicers. The FHFA said Tuesday the unwinding of these networks coincides with the alignment of the GSE servicing guidelines that took effect Sept. 1 and the regulatory consent orders signed with the largest servicers earlier in the year. The FHFA added that the changes would be implemented over time. According to an alert Freddie sent to its servicers Tuesday, there will be no immediate changes to its designated counsel program. "We have not yet established time frames for completion of these activities or implementation of future changes," Freddie said in the alert. One year ago, regulators found major servicers lacked oversight of their foreclosure attorneys and third-party vendors. Many firms began signing foreclosure affidavits en masse and filing faulty documentation in state courts across the country. The FHFA Inspector General recently said the GSEs failed to catch the robo-signing debacle early on. "FHFA believes these efforts will lead to greater transparency and benefit delinquent borrowers who become subject to the foreclosure process," the FHFA said in a statement. Write to Jon Prior. Follow him on Twitter @JonAPrior.