Fannie and Freddie Restart Frozen REO Sales

Both Fannie Mae and Freddie Mac have instructed their selling agents to move forward with transactions involving foreclosed properties in cases where sales were suspended due to potential problems with the legal paperwork.

The GSEs were forced to temporarily halt the sale of certain properties two months ago when news surfaced that some of the nation’s largest servicers – including Bank of America, JPMorgan Chase, and GMAC Mortgage – had been employing robo-signers who failed to comply with clearly defined state laws when handling foreclosure documentation.

Fannie and Freddie also employed the services of the so-called foreclosure mill law firm of David J. Stern in Florida, which is currently under intense investigation for forging foreclosure documentation. Both companies terminated their business dealings with the Stern firm in early November.

The flawed casework from servicers and legal firms has raised questions about the validity of some foreclosure actions and the legitimacy of title ownership in the sale of repossessed homes.

Now that most of the servicers at the center of the paperwork mess have completed a large chunk of their case reviews and found no evidence of improper foreclosures, Fannie and Freddie are moving to proceed with foreclosures and REO sales as customary.

In a memo last week, Fannie Mae told its REO selling agents to “proceed with scheduling and holding the closings” and to direct matters to the appropriate staff “if a title issue arises with respect to the potential defect of an affidavit used in the underlying foreclosure.”

Freddie Mac said in its own memo that agents should “resume all normal sales activity.” The GSE reaffirmed that it will “resume marketing, sales, and disposing of assets previously placed ‘on hold.’”

As of September 30, Fannie Mae’s inventory of single-family REO properties stood at 166,787. Freddie Mac’s REO inventory totaled 74,897 homes at the end of September. Together, the two GSEs hold about a quarter of all bank-owned residential properties in the United States.

This article is from DSNews.com.

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