Fannie Mae Under Fire for Hiring 'Foreclosure Mills'


While the Florida Supreme Court says it's powerless to freeze state foreclosures, some members of Congress aren't taking no for an answer. They've sent a letter to Fannie Mae asking why it continues to hire alleged "foreclosure mill" law firms in order to speed up the process of foreclosures around the country.

Just last week, Ally Financial halted its foreclosure process in 23 states because of allegations into problems with their foreclosures, which are handled by the same firms that these lawmakers say are being used by Fannie Mae (aka Federal National Mortgage Association or FNMA). An Ally employee testified in a Florida case that hundreds of thousands of foreclosure documents were not independently verified. Yesterday, JPMorgan Chase announced that it was suspending 56,000 foreclosure cases for similar reasons. Since Florida's Supreme Court won't intercede, some foreclosures will go forward, even though the documentation may be flawed.

While Florida says it can't act, some states are halting Ally's foreclosures, including California and Connecticut. Attorneys general in Iowa, North Carolina and Texas also opened investigations into Ally. Homeowners facing foreclosure, meanwhile, might need to explore their legal options.