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Fannie, Freddie join forces with regulators to remedy foreclosure paperwork problem

Mortgage giants Fannie Mae and Freddie Mac on Friday said they are taking steps to make sure the companies that service their loans are complying with state law in foreclosures.

Ally Financial and J.P. Morgan Chase, which both Fannie and Freddie use to manage some loans, have admitted to submitting flawed paperwork filed in support of foreclosures around the country--an issue has prompted reviews or formal investigations by attorneys general in at least nine states and federal regulators.

Fannie vice president Terry Edwards said Friday that he's "disturbed" by the reports that the servicers failed to follow proper procedure while Freddie's Bruce Witherell, the company's chief operating officer, said the company "is deeply concerned" about them.

The companies said they are taking action 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," Edwards said.

Freddie's Witherell said that "it's essential that the industry work together to protect borrowers' rights and ensure the integrity of the foreclosure process."

Fannie and Freddie, which together own or guarantee more than half of the $11 trillion mortgage market, have not been been forthcoming with information about the extent to which the problems at Ally Financial and J.P. Morgan affect them and they didn't offer any more insight Friday.

The Federal Housing Finance Agency, which regulates Fannie and Freddie and 12 federal home loan banks, said it has directed the firms "to work collectively to develop and implement a consistent approach to address any problems." The U.S. government owns almost 80 percent of Fannie and Freddie.

"Our goal is to assure the integrity of the foreclosure process and to see that any corrections in processes be tailored to the problem, protecting the rights of borrowers and investors without causing any undue disruption to the mortgage markets," the FHFA said in a statement.

By Ariana Eunjung Cha  | October 1, 2010; 4:30 PM ET
Categories:  Housing  
Save & Share:  Send E-mail   Facebook   Twitter   Digg   Yahoo Buzz   StumbleUpon   Technorati   Google Buzz   Previous: Parsing statements by Citigroup and Wells Fargo on the foreclosure issue
Next: Bank of America joins J.P. Morgan Chase, Ally in halting foreclosures in 23 states


I have a friend in Tucson Arizona that missed 3 mortgage payments during the first 6 months of this year. He tried for 3 months to negotiate a new loan with B of A without success, they kept telling him next week. B of A then sold his home to someone else and he received a letter stating that he has to be out in 5 days.
He has cancer and doing chemo for it every third week. Why and how can this happen in America.

Posted by: Anonymous | October 1, 2010 5:47 PM | Report abuse

As the CEO of Endless Fraud Detection Services, a consumer advocacy company, I see these types of activities regularly with people’s paperwork.

The only advice I can give you as consumers of services from a truly corrupted mortgage lending system is to have certified professionals review your paperwork to see what’s going on in your situation.

Think of it this way! You are the general of your own life. If you think for one second you were scammed, lead on, misinformed, have missing paperwork, missing payments, abused in any way, are thinking about short sale, modification, is experiencing "payment shock" from an adjustable rate mortgage or worse your in foreclosure and you read story's like this you have two options:



Doing your own due diligence is taking a systematic approach to see if you were a victim of a scam, Forensic Audits gather the critical facts and descriptive information which is most relevant to the making an informed decision on a "matter of importance."

Was I scammed in any way by anybody?

When it comes to the nature of this mess many times its not "have I been screwed, but now to what degree has it happened to me?" We know a lot of negative things have happened over the last ten years. This is self evident to anyone who reads story's like this.

When this company was started in the middle of 07 in response to the market we expected to have a far greater percentage of audits that would come back completely clean. We are still waiting for that percentage to actually kick in.

After three years of being involved in this mess on the consumer’s side I have yet to see a Forensic Mortgage Loan Audit come back with no discrepancies of State and Federal Laws, Rules, Regulation, or that did not have some element of predatory lending involved with the creation of the mortgage.


Neil Switkowski; CEO

Posted by: Anonymous | October 1, 2010 6:10 PM | Report abuse

So if they come once with fake documents, do they have free reign to come back and try again with NEW fake docs?

Also, you could have purchased EVERY HOME IN AMERICA for $1 Trillion (USD), so how did the mortgage market get to be upwards of $11 Trillion? Do you think these mortgage "notes" were copied and sold into multiple investment pools and insured with multiple sets of credit default swaps? I submit YES!

What they don’t want to tell you is that the insurance taken out on the loan pool at 30x value of pool (conservatively) has paid off - EXTINGUISHED - the loans in the underlying pool, many times over (AIG, AMBAC, MGIC, TARP, ETC).

But wait a second, weren’t these the same loans that were supposed to be “recorded” in public land records per the terms of the Pooling & Servicing Agreement (PSA) and the Mortgage “contract” (see section 20 of the standard Fannie/Freddie instrument).

So if the chain of custody was never recorded, then the trusts set up to hold the loan pools actually held “nothing but air” - if they even existed at all. Now WHO are these deadbeats that are ruining our communities?

You can’t collect on a debt that has been paid off, that is fraud. Plus, the controlling aspects of the PSA void the sale of the asset under FAS 140, in addition the REMIC will lose it’s tax deferred status under IRS Code. You cannot commit securities fraud, tax fraud, violate a plethora of federal and state lending and consumers laws and get away with it scott free… can you? The crime is mortgage backed securities and the crime scene is our public land records.

Posted by: Anonymous | October 1, 2010 11:46 PM | Report abuse

Freddie Mac is a group of incompetent Clowns that can barely get coffee each morning, they are to provide "compliance activities" to supervise the HAMP program.
Another total farce, of course.
They're taking action "to protect the rights of borrowers..."
You've got a lot to learn...

Posted by: Anonymous | October 1, 2010 11:58 PM | Report abuse

the reason people are losing their homes is because the dems are incompetent bordering on criminal...
they created the crisis to get obama elected...
and they shoveled trillion of dollars that didn't fix the problem, it just made bankers richer...
unless balance is achieved we will be in bigger trouble...
throw out the dems in the house and those up for reelection in the senate...
and in 2012 throw out obama, America's destroyer...

Posted by: DwightCollins | October 2, 2010 5:57 AM | Report abuse

Why does AMERICA put up with these DERIVATIVE / SWAPS PUSHING THUGS? - JP-Morgan, or JP-Morgan-Chase, whatever name they hide behind-- are Criminals-- PERIOD!! - These Funny-Money USURY 'fractional reserve laon' SCAMMERS Should be in PRISON!! -- Millions of UN-REDA - ROBO-SIGNED MORTGAGES is a JOKE & $RIP-OFF of the AMERICAN CONSUMER!! -- This Scheme was well thought out - long ago,- You Sucker CITIZENS. - HA! -- And these Globalist $BANKsters knew that the U.S. CONGRESS HAD TO PLAY ALONG,-- OR THEY WOULD EXPOSE THEIR' UNDER-THE-TABLE SIDE-DEALS & $PAY-OFFS!! - - NOW,- what will CONGRESS DO? - And NOW,- what will WE-the-People do? --- Probably NOTHING as Usual. -- -Why keep Voting for these RED & BLUE 'turn-coat' Benedict Arnolds????

Posted by: Anonymous | October 2, 2010 6:11 AM | Report abuse

Fannie And Freddie were the root causes of this mess in the first place. Now we are supposed to trust them to fix it and do the right thing! When is someone at The Washington Post or some major news source going to report on these Frauds, Fannie, Freddie, BOA, Citgroup etc. They never lost a dime, over apprised properties, pushed for the biggest loans and used the borrowers money to fund these so called loans.

Posted by: Anonymous | October 2, 2010 9:30 AM | Report abuse

The best chance a Homeowner has to accomplish a Principal Reduction is to get a Short Refinance…
For any homeowner upside down in value due to an outside influence of the market and has no other hardship that wants to consider this option and get their principal reset back to today’s market value,
then click, or copy and past this link
for information about what is happening today, results people are getting and how to qualify.

Posted by: Anonymous | October 3, 2010 3:41 PM | Report abuse

so if i have a clean title, pay my mortgage on time, am not underwater on my loan, obtained my loan without resorting to false documents, is my mortgage worth more than your mortgage?

Posted by: Anonymous | October 3, 2010 7:38 PM | Report abuse

Anyone who thinks they have been abused by these fraudulent banks should report it to federal or state regulatory agencies. For a list of contacts:

Posted by: webadmin | October 3, 2010 11:16 PM | Report abuse

To the people who keep referring to foreclosures as "those people who bought houses they couldn't afford" WAKE UP! I worked 20 years and bought a modest condo well within my affordability. I lost my job due to economy...and used my savings and 401-K for ONE YEAR to keep up on payments - GOT IT???? I kept paying for ONE YEAR. They dangled the lies of loan mods etc...and NO ONE sold a home in my area for 8 months+ and at a loss afterwards. This is NOT about deadbeat homeowners it is about BANK FRAUD and they are profiting fourfold: 1) 28% ROI in 5.5 years on my mortgage; 2) PMI payout (they get all the money back via insurance I paid for); 3) Orig asset back (I get nothing!!!!!); 4) resell Orig asset/condo for profit in future; 5) bailout funds they took fraudulently...
What about me???? My savings and 401-K are GONE! They received bailouts to lend for new homeowners and loan mods - BANKS breached that contract - and Banks get 4-fold profits while homeowners thrown on streets to live on Welfare (no jobs, savings gone!!!!)

Posted by: Anonymous | October 5, 2010 11:26 AM | Report abuse

I am 64 yrs old. I bought my first home at age 19. I have bought and sold 7 homes in my lifetime, each one at a profit, which helped w/the down for the next. Each home was a "move up". My last home my husband and I about 6 years ago, at $412,00 w/$35,00 down - and debt free. We thought when we were ready to retire, we could sell at a profit (you know "buy real estate - it's an "investment") and use this money as part of our retirement money. But five years ago I was "laid off" from my job at State Farm of 15 years. At that point, I was able to get a part time job, but our mortgage was a interest only ARM, so before we knew it we owed more on the home than we bought it for and our payments were going up. Even still, we were stupid and thought if we refinanced back into a conventional loan we could make it. Stupidly, we also put about $80,000 into our home over these 5 years to remodel and maintain (All money out of my 401K or inheritance) not a dime was taken out of any equity we might have had at one time. Now we have been in loan modification "review" for over 13 months. We know, like many of our friends and relatives we won't get a modification, they will foreclose and after 40 years of home ownershp, we will be renting. We can't refinance, we owe $480,000, our home as well as every home in this state, is worth at best, if you could sell it, only $250,00. We have tried tried and tried to deal w/Bank of America, and even resorted to hiring an attorney who does loan modifications to try and save our home. Another scam I guess. Where did we go wrong. We have both worked all of our lives, my husband with the same compnay for 31 years, paid taxes and were law abiding citizens. What is happening to America?

Posted by: Anonymous | October 7, 2010 3:14 PM | Report abuse

To Dwight Collins: Let's see, for first 5 years of Bush's administration, congress had a Republican majority. For the first 7 years, the Senate majority was republican. The mortgage problems built up over the period of time before 2008, so, tell me, please, how the Democrats messed the thing up.

Posted by: Anonymous | October 7, 2010 6:36 PM | Report abuse

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