Fannie Mae, the taxpayer-owned company that owns or insures a large portion of U.S. mortgages, has known since May 2006 that its lawyers were falsifying court documents, which ultimately led to some people getting evicted from their homes illegally, according to a new government report.
Even now, a year after the related robo-signing scandal broke, Fannie Mae still lacks the internal controls to prevent its lawyers from breaking the law. The company’s attempts to fix the problem have been “ineffective,” according to the report, published by the inspector general for the Federal Housing Finance Agency, (FHFA) which oversees Fannie Mae.
[Identity Theft: Free Identity Risk Score and profile from Credit.com]
As Fannie Mae struggles to improve, regulators should be particularly tough “(g)iven Fannie Mae’s history of non-compliance,” according to the report.
The company has other weaknesses as well, the report found. Its computer systems are outdated and poorly integrated with one another, and it’s doing a poor job of managing the private mortgage servicers that handle the day-to-day administration of the loans.
[Featured Product: Research and Compare Identity Theft Monitoring Services on Credit.com]
Such lax internal control has allowed illegal behavior to fester for at least five years, the report found. An internal investigation at Fannie Mae found in 2006 that “some of its foreclosure attorneys were sacrificing accuracy for speed, i.e., filing false documents in foreclosure proceedings,” according to the report.
And yet in the ensuing years, the company did not “make any improvements in its oversight of its law firms.”
The inspector general calls on Fannie Mae and FHFA to improve their systems to make sure that foreclosure laws are followed.
[Related article: Lawsuits: Big Banks Defrauded Taxpayers for $200 Billion]
Image: futureatlas.com, via Flickr.com