Saturday, October 1, 2011

Fannie Mae’s Missed Chances To Stop Robo-Signing Hurt Chicagoland Homeowners

Our Oak Park foreclosure defense attorneys have closely monitored the robo-signing scandal from the beginning, because we understand that thousands of homeowners were made vulnerable when unscrupulous mortgage lenders engaged in fraudulent lending practices.  Robo-signing refers to a number of fraudulent lending practices, including when foreclosure documents are illegally signed.  The robo-signing scandal is an example of one of the worst foreclosure abuses in recent times. According to a report by NPR, big-time mortgage financiers like Fannie Mae and Freddie Mac knew about the fraudulent robo-signing practices as early as 2006 but failed to do anything to stop the illegal behavior.  Instead of implementing an effective system to stop the abuse and prevent further fraudulent mortgage foreclosure practices, Fannie Mae missed important opportunities to detect and prevent them. 

For example, in 2005, Fannie Mae hired independent investigators to follow up on allegations of fraudulent and defective foreclosure paperwork.  A year later, the outside investigators reported that law firms working for Fannie Mae had filed false documents in foreclosure proceedings.  In many instances, Fannie Mae’s lawyers had signed documents they’d never bothered to read or used fake signatures.  Even after Fannie Mae was put on notice that its attorneys were committing fraud and breaking the law, regulators determined that Fannie Mae failed to make any improvements in overseeing its attorneys.  To add insult to injury, government regulators then failed to ensure that the mortgage-financing company cleaned up its act. 

Reports released last week by the inspector general of the Federal Housing Finance Agency, which was created in 2008 to oversee Fannie Mae and Freddie Mac, indicate that Fannie Mae simply did not have enough examiners to control the risk.  As a result, the two mortgage-financing giants, which back the majority of mortgages in the United States, apparently failed to institute an effective level of quality control.  The reports suggest that if the mortgage lending companies had employed better risk control, they may have been able to prevent mortgage foreclosure abuses.  Better risk control likely would have forced Fannie Mae to alter its lending practices, which could have exposed flaws in the processing of foreclosure documents, including forcing its employees to more carefully consider individual foreclosure cases. 

Although courts in Illinois and across the country halted mortgages foreclosure proceedings while investigations into the fraudulent robo-signing practices were launched, it was not enough.  Struggling Chicago homeowners have suffered the consequences because lenders and their attorneys cut corners and left everyday consumers to pick up the pieces.  Oak Park homeowners who believe that fraudulent paperwork may have been filed in their mortgage foreclosure cases should consider seeking out legal advice from a qualified professional.  Illinois foreclosure defense law frequently changes, so it is important to receive up-to-date information about your rights.  The Chicago foreclosure defense lawyers at the Emerson Law Firm assist struggling homeowners day in and day out as they defend their rights in foreclosure suits or simply obtain mortgage loan modifications.  If saving your home is important to you, it is important to us. 

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