19 August 2010

Lawmaker Wants Hearing into Fannie Allegations

Associated Press

A House Republican is calling for a hearing into a former Fannie Mae employee's allegations that the mortgage giant fired her after she criticized how the company was running a government loan assistance program.

The former Fannie Mae executive, Caroline Herron, made the allegations in a lawsuit filed in June. It was disclosed Friday by the Washington-based Center for Public Integrity.

Fannie Mae executives, the lawsuit alleges, resisted Herron's calls to require borrowers to provide proof of their incomes up front before entering into loan modifications. Fannie Mae, she alleges, had a financial incentive to resist because the company was eligible for government payments.

She also charges that Fannie Mae executives ignored her efforts to develop a Web-based system for collecting information from borrowers' seeking loan assistance.

Rep. Spencer Bachus, the top Republican on the House Financial Services Committee, asked for the hearing in a letter to the committee's chairman, Rep. Barney Frank. Lawmakers, he wrote, need to examine whether Fannie Mae "mishandled and mismanaged" federal programs designed to combat foreclosures.

A spokesman for Frank declined to comment. Brian Faith, a Fannie Mae spokesman, said the company hired an outside law firm earlier this year to investigate Herron's charges. "The investigation found no merit to her allegations," he said,

The lawsuit is the latest problem for the $75 billion Obama administration program, called the Home Affordable Modification Program. It has been widely criticized for failing to help hundreds of thousands of homeowners at risk of losing their homes. More than 40 percent of U.S. homeowners who initially signed up for the program have dropped out, while about 30 percent have received permanent help.

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