category

Foreclosure fraud: Fannie Mae ignored warnings for years

Equitable Mortgage Company, New York c1888. (Library of Congress)

In 2003, Nye Lavelle, a rich Florida businessman who had spent years investigating the mortgage industry following his own experience with foreclosure on a family-owned property, made a list of what he found wrong and shared it with the nation’s largest mortgage buyer, the Federal National Mortgage Association (Fannie Mae). After two years of corresponding with Mr Lavelle, Fannie Mae hired a Washington law firm to look into his claims. That firm’s 2006 confidential report to Fannie Mae corroborated many of the warnings about illegal activity on the part of loan-servicing companies it was doing business with but opined that some of Mr Lavelle’s claims were overstated. There is little reason to believe that anyone at Fannie Mae ever did anything further about the subject.

One of the companies Mr Lavelle warned about was Mortgage Electronic Registration Systems Inc. (MERS).

Perhaps no development has done more to obscure the forces behind the foreclosure epidemic than the rise of the MERS, the private registry that has all but replaced public land ownership records. Created by Fannie, Freddie and big banks, MERS claims to hold title to roughly half the nation’s home mortgages. Judges and lawmakers have questioned MERS’s legal authority to initiate foreclosures, and some judges have thrown out foreclosures brought in its name. On Friday, New York’s attorney general sued MERS, contending that its system led to fraudulent foreclosure filings.

MERS no longer participates directly in foreclosures, but as Mr Lavelle says,

“Hundreds of thousands of foreclosures in Florida and across America were knowingly conducted unlawfully, for which there are still severe liabilities and implications to come for many years.”

Comments are closed.

Powered by WordPress. Designed by WooThemes