OIG Questions Process for Paying Mortgage Proceeds to Fannie Mae

This story appeared in Bank Digest.

The Federal Housing Finance Agency Office of the Inspector General has referred to information developed during a criminal investigation to raise a potential weakness in the way loan servicers pay mortgage loan proceeds to Fannie Mae. The servicer in question was collecting payments made during trial modifications under the Home Affordable Mortgage Program, the OIG said, but holding the funds in suspense accounts and, if permanent modifications were denied, returning the funds to the homeowners. The money should have been paid to Fannie Mae. According to the OIG, the weakness "may be systemic throughout the industry."