Fannie Mae (OTC:FNMA) has joined Freddie Mac (OTC:FMCC) in suspending new referrals to controversial mortgage and foreclosures firm David J. Stern PA (NASDAQ: DJSP).
Amy Bonitatibus, spokeswoman for the nation’s largest provider of mortgage financing, said yesterday that Fannie Mae has decided that “it was appropriate and responsible to suspend new referrals” to the Florida-based law firm, Bloomberg News reported.
Fannie Mae’s announcement came a week after Law.com reported that Freddie Mac had stopped referring new foreclosure cases to the Stern firm “pending the outcome of its own internal review.” Several news sites also reported last week that Citigroup Inc. (NYSE:C) had suspended referrals to Stern.
The Law Offices of David J. Stern PA is in the midst of the brewing controversy known as “foreclosure gate.” The firm is under investigation by Florida Attorney General Bill McCollum for possible fraudulent handling of foreclosure affidavits.
Bloomberg also reported that Fannie Mae has hired law firm Bradley Arant Boult Cummings LLP to review Stern’s foreclosure paperwork. Jeffery Tew, attorney for David J. Stern, said “The firm is fine with that and we’re happy to let them do their review.”
The Fannie Mae suspension of new referrals to Stern began October 11, according to Bonitatibus. Freddie Mac’s suspension took effect October 8 according to an earlier report by Housingwire.
Meanwhile, MSN’s MoneyCentral reported that favored employees of Stern “received gifts of cars, jewelry and even a house, plus had their mortgages and other personal bills paid by the firm.” Basing its report on the deposition of a former administrative assistant and several others, the MSN article mentioned that a Stern employee received a house and had his personal bills paid “in exchange for fabricating and backdating” foreclosure documents.
The deposition of former administrative assistant Kelly Scott and several others were released by the Florida Attorney General’s Office, the article mentioned. Scott worked as an assistant to Cheryl Samons, a Stern employee who admitted in court documents last year that she signed hundreds of foreclosures every day without verifying the accuracy of the documents.
The widespread use of “robo-signers,” bank employees or contractors who signed foreclosure documents without checking their veracity, is at the heart of the brewing mortgage and foreclosures scandal. It is believed that the practice has caused thousands of homeowners to be wrongly evicted from their homes.
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