Study: Agency Ignored Housing Fraud Reports

June 22, 2011

A new report finds that the federal agency overseeing Fannie Mae and Freddie Mac was unresponsive to nearly 100 complaints about foreclosure abuse and mortgage fraud in a two-year time period, failing to report complaints of abuse to investigators.

“Failure to recognize and quickly provide law enforcement authorities with information about allegations of fraud and other potential criminal conduct presents a significant risk for the agency,” according to the report issued by the inspector general of the Federal Housing Finance Agency.

The report covers the time period from July 30, 2008 to Oct. 31, 2010. The FHFA report did not highlight whether the housing complaints even had merit, but the report said it was alarmed at the agency’s unresponsiveness to complaints.

“Millions of Americans have been touched by the housing crisis,’’ Steve A. Linick, the inspector general, said in a statement. “Increasingly, they have filed complaints about fraud, waste or abuse, including allegations of improper foreclosures and possible criminal activity. Those complaints deserve timely and responsible action by FHFA.’’

The inspector general examined 585 e-mail complaints from the FHFA and found that 68 described potential foreclosure abuses and 27 involved suspicions of fraud. The complaints were never forwarded to the general counsel’s office at the FHFA for further investigation, the report noted.

Source: “Agency Left Possible Fraud Unchecked,”Boston Globe (June 22, 2011) and “Oversight Group Did Not Refer Housing Complaints,”The New York Times (June 21, 2011)