Alleged shenanigans in foreclosure proceedings by lenders' counsel in Colorado, which we've previously discussed here and here, have prompted some serious consequences for two of the law firms fingered in the investigations.
Fannie Mae is not going to send its foreclosure business to two specific law firms in Colorado, effective immediately, the government-sponsored enterprise can confirm.
"Fannie Mae has instructed servicers to cease referrals of new foreclosure cases to Aronowitz & Mecklenburg and the Castle Law Group and to transfer existing cases at those law firms to other firms," said Fannie Mae spokesperson Keosha Burns.
The GSE would not comment on why it so suddenly terminated its relationship with both firms.
As discussed in the previous posts, the Colorado Attorney General's office has been investigating whether the firms inflated costs of foreclosures, either directly or theough the use of captive service firms. The fact that Aunt Fannie would suddeenly drop the bomb on two law firms that handle the majority of its work in Colorado may be an indication that some action from the AG's office is forthcoming and the state regulator gave Fannie Mae a heads-up. If so, the results caused loan servicers in that state some heartburn.
The GSE's decision apparently caught more than a few servicers off-guard this week, and some were scrambling yesterday and today to find additional available legal counsel in the state, HousingWire was told by sources that wished to remain anonymous.
I'm confident that in the land of the over-lawyered, there will be plenty of sharks to eat the prey. One thing the United States does suffer from is an undersupply of lawyers.
HousingWire is one of the few trade press outlets that covers this story. As we've mentioned before, that's odd. It's got all the juicy elements fit for prime time: banks, lawyers, non-paying homeowners, large loan servicers, press-hungry state law enforcement officials: all the favorite enemies or heroes of a narrative, depending upon who's spinning the story. Yet, for some reason, certain major publications seem reluctant to jump on board. Inquiring minds want to know: "Why?"
Stay tuned. This will not be the last word on this troublesome topic.