Oct. 20 (Bloomberg) -- Fannie Mae, the largest provider of mortgage financing in the U.S., said it halted referrals to a Florida foreclosure-processing law firm that’s being investigated by the state attorney general.
The Law Offices of David J. Stern PA have drawn scrutiny in Attorney General Bill McCollum’s investigation into the foreclosure of homes based on possibly fraudulent or improperly prepared documents. Citigroup Inc. said last week that it had suspended referrals to Stern’s Plantation, Florida-based firm.
“Given the increasing questions related to the Stern law firm, we decided it was appropriate and responsible to suspend new referrals to the firm,” Amy Bonitatibus, a spokeswoman for Washington-based Fannie, said today.
The suspension began Oct. 11, she said. Fannie Mae, which has a $3.3 trillion book of business, has hired law firm Bradley Arant Boult Cummings LLP to review Stern’s processes and operations.
Jeffrey Tew, David Stern’s attorney, said that his client was “cooperating fully” with the Fannie Mae inquiry and that the mortgage giant “is doing their due diligence in light of some things that have been published.”
“The firm is fine with that and we’re happy to let them do their review,” Tew said.
Freddie Mac, the nation’s second-largest provider of mortgage financing, has also suspended referrals to Stern’s firm pending a review, Brad German, a spokesman, said in an e-mail.
The company is “deeply concerned about recent reports that some law firms handling foreclosure cases may have failed to follow appropriate legal standards in preparing or filing documents used in the prosecution of foreclosure cases,” German said. McLean, Virginia-based Freddie has a $2.2 trillion book of business.
Bonitatibus denied some assertions made in depositions McCollum’s office took from former Stern employees about the workings of the firm and its relationship with Fannie, including that the lender had imposed quotas on the law firm.
“Fannie Mae has never had in place quotas for the number of foreclosure cases,” she said. She also said the Stern firm never paid for food or lodging for any of Fannie’s employees.
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