Fannie Mae and Freddie Mac have terminated their relationships with a top Florida foreclosure law firm and began taking possession of loan files on Monday afternoon from the firm, which processes evictions on behalf of the mortgage-finance giants.
Fannie and Freddie had previously suspended all foreclosures that had been referred to the law offices of David J. Stern in Plantation, Fla., a suburb of Fort Lauderdale.Freddie Mac took the rare step of removing loan files after an internal review raised "concerns about some of the practices at the Stern firm," a Freddie spokeswoman said.
"We have begun taking possessions of all files on Freddie Mac mortgages simply to protect our interest in those loans as well as those of the borrowers," the Freddie spokeswoman said. A Fannie spokeswoman declined to elaborate.
Fannie and Freddie said they will move those files to other law firms in the state but that they hadn't yet identified where they would be redistributed. The firms said they had notified Florida's attorney general about the decision to remove the files and that the Stern firm had cooperated with the action.A lawyer for Mr. Stern didn't immediately respond to inquiries.
The Stern law firm has been at the center of allegations by the Florida Attorney General's Office of improper foreclosure practices. The office has released depositions of former law-firm employees who have alleged that the firm forged notarized documents and that employees signed files without reviewing them in an effort to speed through foreclosure filings.
Fannie and Freddie both provide lists of approved law firms to mortgage servicers that handle defaulted loans on behalf of the companies. Fannie said last week it was in the process of adding as many nine law firms to its legal network in Florida, doubling the current number of approved firms.
Freddie has as many as 10,000 foreclosures being handled by the Stern firm, according to people familiar with the matter.
(source:wsj.com)
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