Reply #102: Fannie: Mortgage fraud report proposal would boost legal risk

[UpInArms]

http://www.marketwatch.com/news/story.asp?guid=%7B39BD1B5A%2D805B%2D425C%2DAD04%2DE3E55D3E6F8E%7D

WASHINGTON (MarketWatch) -- A proposal to require Fannie Mae (FNM) and Freddie Mac (FRE) to report mortgage fraud and possible mortgage fraud in a timely fashion would expose them to "significant legal risk because no safe harbor exists to protect the companies from actions that may result from their disclosure of information," Fannie Mae said.

"This increase in legal risk could diminish the safety and soundness of Fannie Mae and Freddie Mac," Fannie Mae said in a recent comment letter to its regulator, the Office of Federal Housing Enterprise Oversight.

In proposing the mortgage fraud reporting rule in late February, OFHEO cited a case where Fannie Mae failed to inform Ginnie Mae about a fraud of which Fannie was aware and which victimized Ginnie Mae, a federal entity whose formal name is the Government National Mortgage Association.

"The lack of a safe harbor from liability leaves open the possibility that Fannie Mae would be subject to civil lawsuits after reporting to OFHEO suspected mortgage fraud that was later determined to be negligent or non-fraudulent activity," Fannie Mae said.

...more...

ah, the wonderous age of accountability :sarcasm: