For Immediate Release
Whistleblower: Fannie Mae Bungled Anti-Foreclosure Program
their stewardship of the federal government's massive
foreclosure-prevention campaign, creating a bureaucratic muddle
characterized by "mismanagement and gross waste of public funds,"
according to a former Fannie Mae executive and consultant.
Whistleblower Caroline Herron claims
that the Home Affordable Modification Program (HAMP) was marred by
delays, missteps, and executives preoccupied with their institution's
short-term financial interests. Her allegations provide a rare account
from a former insider willing to tell what was going on behind closed
doors with the government's handling of the $50 billion HAMP program,
according to interviews and documents reviewed by the Center for Public
Herron charges in a lawsuit that
Fannie, which had a $113 million contract to administer HAMP, pushed as
many borrowers as possible into short-term trial modifications because
it was eligible to receive incentive payments from the Treasury
Department for trial modifications it booked before the end of 2009.
Despite its original stated goal of saving three million to four million
homeowners from foreclosure, HAMP permanently modified about 230,000
mortgages in the program's first year - the equivalent of 8 percent of
new foreclosures filed in 2009 alone.
Herron and others also criticize how
Fannie and Treasury handled a "borrower portal" technology project aimed
at helping to break the logjam of homeowners struggling to document and
complete their modification requests. The lawsuit alleges that Fannie
was reluctant to move quickly to make it easier for homeowners to
provide extensive documentation to their loan servicers because it
wanted to continue processing less-documented trial modifications.
A former Fannie vice president who
returned to the mortgage giant in 2009 as a high-level consultant,
Herron alleges that Fannie Mae officials terminated her $200-an-hour
consulting work in January because she raised questions about its
administration of the program.
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