New York Subpoenas Fannie Mae and Freddie Mac
November 30, 2007
Andrew Cuomo, New York’s Attorney General, recently stated that he had sent subpoenas to Fannie Mae and Freddie Mac, two government sponsored lenders, concerning his concerns that the organizations had conflicts of interests in their mortgage lending policies.
The Attorney General stated that he wanted to learn more about various loans that Freddie Mac and Fannie Mae had purchased from various banks. These banks included the large Washington Mutual bank. Cuomo also stated that the subpoenas were to be used in order to learn more about how Fannie Mae and Freddie Mac handled its appraisals policies.
According to Cuomo, the two lenders have agreed to allow a third party examiner to review Washington Mutual mortgages and appraisals as they pertain to Fannie Mae and Freddie Mac issues.
“In order to fulfill their duty to consumers and investors, Fannie Mae and Freddie Mac must ensure that Washington Mutual’s mortgages have not been corrupted by inflated appraisals,” the Attorney General of New York said.
“Our expanding investigation into the mortgage industry has uncovered that Washington Mutual improperly pressured appraisers to provide inflated values that best served the lender’s interest,” Cuomo said. “Knowing this, Fannie Mae and Freddie Mac cannot afford to continue buying Washington Mutual mortgages unless they are sure these loans are based on reliable and independent appraisals.”
Fannie Mae and Freddie Mac were created by Congress to make home ownership affordable for low- and middle-income people