The lending giants Fannie Mae and Freddie Mac have made headlines again, only weeks after former Fannie Mae employee Amando Granillo was found guilty in his foreclosure kickback trial. It would appear that once again their foreclosure experts have tried to cheat the system – and the RE community.
A newly released report by the Office of Inspector General for the Federal Housing Finance Agency has found that the two companies have some serious issues regarding their quality control, accusing the lenders of reporting fraudulent and manipulated data in their pre-foreclosure inspections. The report states that Fannie and Freddie “do not have quality controls in place to obtain reasonable assurance that pre-foreclosure property inspection information is accurate, consistent, and complete.”
Among the many complaints listed, the report found that many property inspection reports contain inaccurate data conflicting with photographs; have missing, manipulated and blurry photographs; fail to include the names and signatures of those who conducted reports; are performed from outside gated communities rather than waiting to gain appropriate access; and lack proper oversight to evaluate the inspector’s performance.
In one case mentioned by the report, an inspector provided information about a property which had been copied over from previous reports. Similarly, another inspector used photographs dated from April 2007 in a report submitted in December 2012. In several cases, the dates of old photos like this had been changed to reflect the date of inspection.
In response to the report, the FHFA has agreed to “issue supervisory direction to each Enterprise to perform and document an assessment of risks and standards related to pre-foreclosure property inspections.”
Unfortunately, the expected completion date for this policy is not until January 31, 2015.
Do you think that the FHFA’s response to this issue is adequate, or will these fraudulent reports continue until further action is taken?
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