FHFA to States that Uphold the Rule of Law: Drop Dead

If you had any doubt that the ongoing coup by bankers and their allies was proceeding apace, the latest story from Shahien Nasiripour of the Financial Times should settle all doubts.

The pink paper reports that Fannie and Freddie’s regulator, the FHFA, plans to punish impose surcharges on borrowers in states like New York because foreclosures take longer there. This is the excuse, erm, rationale:

US borrowers in states where home foreclosures are costly and time-consuming will have to pay more for their mortgages, the top housing regulator has proposed.

Lenders originating new loans in New York, New Jersey, Illinois, Florida and Connecticut will be forced to pay US-backed mortgage giants Fannie Mae and Freddie Mac up to 30 basis points extra for their credit guarantee, the Federal Housing Finance Agency said in its proposal.

The fee would probably be passed on to borrowers. The agency said the surcharge would compensate for the increased cost of repossessing homes in the five states, costs ultimately borne by US taxpayers.

And the FHFA was open in that its aim was to put state law on its Procrustean bed:

“If those states were to adjust their laws and requirements sufficiently to move their foreclosure timelines and costs more in line with the national average . . . the fees imposed under the planned approach would be lowered or eliminated,” the FHFA said.

Now the reality, of course, is more complicated. The two mortgage insurers have refused to crack down on foreclosure mills despite overwhelming evidence of their failure to comply with long-established state law requirements. When the robosigning scandal broke, many judges in judicial foreclosure states started taking borrower challenges to servicer standing more seriously. New York’s courts instituted a requirement that lawyers submitting documents in foreclosures certify that they had taken reasonable steps to certify their accuracy. This might sound like a belt-and-suspenders requirement, but from a procedural standpoint, it made it easier for borrower’s counsel to seek sanctions if he though the bank’s attorney was playing fast and loose. And indeed, as we’ve documented, foreclosures ground to a near halt after the certification requirement was instituted.

Conversely, in Florida, the idea that protracted foreclosure times are the product of overly cumbersome court requirements is largely a crock. We’ve been reporting for well over a year that delays in foreclosures in Florida are driven almost entirely by the bank/servicer counsel repeatedly putting off court dates, to the point where judges are annoyed and frustrated. It appears a big driver, if not the big driver, is the depressed state of the housing market. Even with the recent wave of bottom-fishing, servicers seem to want to attenuate the foreclosure process to keep borrowers in homes, which both reduces their maintenance costs and keeps too many foreclosed homes from either being held in inventory a long time (which leads to deterioration in value) or put on the market at once (depressing prices).

What this is really about is a further push to try to achieve national standards, even though real estate or “dirt law” has long been treated by the Supreme Court as a state law matter. So the power of the GSE is being used to pressure state legislatures to join a legal race to the bottom. If state bar associations had instead players their proper role and had disbarred foreclosure mill attorneys, Fannie and Freddie would have been forced to clean up their act on foreclosure processes and the FHFA would not have found it as worthwhile to try to implement this sort of extortion.

I’m not holding my breath, but the GSE haters also tend to be in favor of state’s rights, so it might be possible to craft an alliance between some of the Fannie and Freddie opponents and borrower advocates on the need for the primacy of the rule of law. Congressman Brad Miller minced no words:

It is hard to see this as anything other than bullying states that are protecting homeowners from foreclosure abuses. FHFA has no business holding a state’s new mortgage market hostage to extort weaker homeowner protections for existing mortgages.

This effort to perpetuate bad practices by the GSEs by blaming states needs to be called out and firmly opposed.

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  1. YankeeFrank

    Friggin’ hell. These people have no shame. They refuse to do their jobs and then attempt make the victim suffer for their slovenly, lazy and corrupt ways. Yeah Obama! I’m so glad Romney’s on the ropes. Out of the frying pan into the fire.

    A dickwad, Obama is.


    1. Bob

      It troubles me to no end, that the people of the united states are faced with two choices for president. Both parties are corrupt and out of touch with the common person. Also the common person is out of touch with the founding principles of this country which is based on freedom and rule of law.

      Until people wake up, realize that these puppet presidents are out for themselves and their constituents ( corporations ), nothing will change. Both parties have created this mess we are in today over the last 30 plus years. Printing money and debasing the currency, eventually leads to a collapse.

      1. DiamondJammies

        “Also the common person is out of touch with the founding principles of this country which is based on freedom and rule of law.”

        It’s also possible that the common person misperceives these founding principles and hasn’t yet come to grips with the fact that this freedom was, sadly, only ever meant for people with the right sort of genitals and the right skin color and a “goodly sum” of property.

        That freedom means something else today is not due to any slave-owning Founders, but to the heroic class struggle waged by untold millions of the oppressed, in this country and around the world, for last few millennia.

        That’s the source and substance of your freedom.

        1. DiamondJammies

          Let me add, the Human Freedom Project is still incomplete and will remain that way until we finally end wage slavery.

      2. Stanley Gron

        What is needed is TERM limits on Senators and congressmen.
        A good way to push this, I believe, would be through the established Tea Party network

        Senators and congressmen become millionairs through their longevity and supposed stature in Washington.

        Behead the fools

        1. Zorro

          The framers has set very specific “term-limits” spelled out in the Constitution. “Two-year” ,”four year” and “six-year” respectively of positions.
          There is absolutely not one word to mean, or could be interpreted that those were unlimited, or any number of repeated term limits.
          What is done today is absolutely contradictory to the Constitutionaly set term-limits for each respected office.

      3. citalopram

        Both parties are symptom of the populace.

        Americans have given up and taken whatever these liars and thieves offer. A certain percentage of Americans vote for the liars and thieves. A smaller percentage divide themselves up according to which liar or thief they like best, advocating for them.

        I call those people idiots.

    2. LadyLiberty

      Indeed obama is the bankster president the reason this is all being done is it was planned months ago for obama’s cronies.

      A Huge Housing Bargain — but Not for You
      NEW YORK (RealMoney) — The largest transfer of wealth from the public to private sector is about to begin. The federal government will be bulk-selling the massive portfolio of foreclosed homes now owned by HUD, Fannie Mae and Freddie Mac to private investors — vulture funds.

      These homes, which are now the property of the U.S. government, the U.S. taxpayer, U.S. citizens collectively, are going to be sold to private investor conglomerates at extraordinarily large discounts to real value.

      You and I will not be allowed to participate. These investors will come from the private-equity and hedge-fund community, Goldman Sachs (GS) and its derivatives, as well as foreign sovereign wealth funds that can bring a billion dollars or more to each transaction.

      In the process, these investors will instantaneously become the largest improved real estate owners and landlords in the world. The U.S. taxpayer will get pennies on the dollar for these homes and then be allowed to rent them back at market rates.

      On Wednesday, the Federal Housing Finance Agency (FHFA), the Department of Housing and Urban Development (HUD) and the U.S. Treasury Department issued a Request for Information (RFI) concerning the disposition of the inventory of foreclosed homes owned by the federal government.

      An RFI is ostensibly a way for the federal government to get input from the private sector on how to accomplish the goals laid out in the request. But that’s really just a facade, as the RFI was structured by the investors to begin with.

      Obama Crony Warren bailed out buffoon said he would buy 200,000 homes


      This is why the FED did qEternity the banks/investors and crony’s will make a fortune.

      Investors With Ties To Buffett, Soros, Obama Plan Mortgage Eminent Domain Grab


      They expect 5 million more foreclosures in the next couple years and investors have been complaining because they can’t get their hands on them fast enough. Remember Fannie/Freddie own hundreds of thousands of them and have only been putting a limited amount on the market. It will likely speed up now thanks to the collusion of the Fed and obama

      1. Fiver

        Interesting post.

        The scarily bold idea that they (meaning both Reps and Dems along with Wall Street) are essentially going to manufacture as Fed-inspired and monumental a financial stupidity and outrage as the FIRST housing bubble/MBS securities holders’ crisis/global bankster junta of 2001 thru 201_ is disturbing to say the least.

        The prospect at this juncture is disturbing to say the least.

        1. Zorro

          Stop and think for a moment. Who realy owns your home, car, your credit card ,your business, the shopping-center,etc, etc? Oh no ! The banks hold the note, the real ownership is in the hand of the banks that put the money up and holds the strings. That is commonly called “finance-capitalism”.

          Have you forgotten what happened in the 1930’s?
          In Germany the unemployment was 45% The left,the Marxist-leninsts and on the right the national socialist were about to take control. What did the banks and mega-industrialist do? Krupp in his memoars admitted that they “hired’ Hitler.
          As they saw a good business opportunity in Hitler’s re-armament,puting peoples back to work,re-occupying lost territories,etc. And they prevented the left-communist to take power that was to confiscate all private property from them. That is how the term of “fasizm” become synomous for finance capitalism.
          Do you think we are not there?

    3. Fiver

      And yet, given the huge support Obama receives from MSM (minus Fox and a Limbaugh or two) and delusional Democrat “progressives” efforts (still !!) to cast O as the Better Late Than Never Redeemer, I will wager half those foreclosed in those States effected who vote, will vote Obama.

      What can we do if we all too often cannot get even well-educated people to inform themselves via quality sources and for more than 15 minutes? Thank God there are still sites like NC available – though for how long in the 24/7 “security” prison we are now all locked in is difficult to say.

  2. Michael Olenick

    I ran the numbers and think the FHFA’s estimate of a $7/mo increase is on the high side; 30 bps up-front on a $200K mortgage is $600. Their $200K loan would require $40K down so they’d be financing $160,600. At 4% interest, over 40 years, that comes to an extra $2.86/month.

    It’s impossible to see that this amount could make any difference to any substantively different environment. It’s low enough they can argue to Congress that borrowers shouldn’t care. They’re pushing this proposal solely to enable the lobbyists they’re working with to push for non-judicial foreclosure; to raise tensions. There was already at least one article in the FL-based Palm Beach Post about it, despite that the ink is barely dry. This is a brazen political move entirely disconnected to finance and risk.

    DeMarco has his job because Obama and Geithner want him there; Romney probably feels the same way though. Neither would want somebody more friendly or hostile, lest they do the right thing and actually burn the places down by forcing a sale of the portfolios and putting in place to ramp down the default guarantee program.

    Maybe DeMarco miscalculated on this one though. There is a very real possibility that Congress actually intervenes. Republicans have long despised the agencies, and Democrats have been veering their way since the meltdown. It’d be politically tough for either a reelected Obama or newly elected Romney to veto a bill that finally destroys these two monsters.

    Fannie and Freddie are like Kudzu, a weed that should never have been introduced into a, ecosystem, that grows out of control, and that strangles the native vegetation. There will never be a healthy private mortgage market as long as they exist in their current form.

    1. Michael Olenick

      I was running out the door and that should have been 30 years, not 40; the rest of the numbers are right though (it was a typo, not a miscalculation).

      DeMarco and the agencies are pushing a political agenda — they’re lobbying — not promulgating rules based on the their mandate that are attached to genuine credit risk.

      1. Capo Regime

        Very interesting. Its odd that only now obliquely the issues arising from the differences in the judicial foreclosure vs strength of sale states is starting to become an issue. Even in say an honest regime the differences between the time to regain the secured asset via foreclosure are certainly salient–FLA several years, Texas 90 days. Not inconsequential but alas overlaying blanket federal programs over two different legal approaches to foreclosure was bound to get messy sooner or later.

        1. Capo Regime

          While in some cases the difference in rates between Judicial and Strength of sale states is significant one wonders if it captures true differences and if it was just padding and not an actual risk based factor. Some individual rates may not capture the risk differential and thus there may be doubling up on the risk premiun in some cases and not in others–ah lenders doing their usual bang up job.

    2. Yves Smith Post author

      Thanks for the reminder re the actual impact. But this is still going to be used in an effort to get realtors on the side of “streamlining” foreclosures.

      1. Capo Regime

        Thanks to David Stern there won’t be much streamlining in the Sunshine state. One day he may be the unintended hero of many floridians–they get a nice long respite form homelessness and have free housing for a time to allow them to regroup.

  3. Transor Z

    Unconstitutional comandeering of state government functions by the federal gov’t. FHFA is vulnerable in promulgating and enforcing this, especially because they were dumb enough to articulate this rationale.

  4. monday1929

    An alliance between the FRANNIE haters and borrower advocates to support the Rule of Law? Not hardly. The old FRANNIE haters simply wanted the Criminal bankers to have the theft concession all to themselves.

    1. monday1929

      Oh, and John Stewart called the bankers “welfare queens” this week.
      They do need to be called that much more often, especially the lead Socialist Welfare Queen- Jamie Dimon.

      Anyone have any suggestions on how to play a Canadian real estate collapse with Puts? One can’t buy foreign Puts in U.S.

      1. ebear

        I’d be careful about that. As I tried to tell Mish Stopped-Clock, just because home prices are high doesn’t make it a bubble. Noodle it out. With world-wide theft on a massive scale, the money has to go somewhere, no? People ask me if Vancouver (where I live) is in a bubble. I say, is Monaco in a bubble? How about Geneva or Montivideo?

        Buyers here pay in full with checks drawn on offshore banks. Most of the money comes from China. If things go south over there, which way is the money going to flow? Also, there were no liar loans, jumbos or teaser rates up here. You need equity and proof of means to get a mortgage, and that’s always been true.

        The house across the street from me is as good an example as any. Sold for 1.8M, owned jointly by four young chinese guys. The chinese team up to get things done and there’s lots of them in Canada. Same goes for the Indians who are also here in numbers. We could learn from them, but Canadians seem content to just rent from them. So it goes.

        But if you want to roll the dice, I’d look for a US ETF that holds Canadian financials. Or you could short Canadian banks and RE co’s that trade on the NYSE. Good luck!

  5. jake chase

    Don’t waste your powder on anything this trivial, and save your paeon to state’s rights. State’s rights went out the window with the Civil War, and what little was left was eviscerated by the people’s hero, FDR. The next shoe to drop will be an assault on state recording laws in the name of regulating commerce. And they better do something soon to protect those buying houses foreclosed by entities which cannot prove they own the foreclosed mortgages or the underlying notes.

    Legal rights are nothing more or less than those privileges the state elects to protect. Constitutional arguments are nothing but mumbo jumbo, and if you believe otherwise I recommend The Transformation of American Law, by Morton Horwitz, the only book on law anybody really needs to cut through the endless bs from both sides of the political spectrum.

    1. monday1929

      Jake, you go from obnoxious to enlightening and back again (like many of us). Will check out the book, thanks.

      1. jake chase

        I suppose that’s a compliment, of sorts. Did you mean generally or in this one comment? Do you think it’s easy holding the feet of the well intentioned to the fire?

    2. Susan the other

      I would appreciate a brief, 3 or 4 paragraph book review on the Transformation of American Law. I can practically outline it in my own imagination and my experience with court is that facts proving one party was wronged still hold the day. I can’t imagine that basic fairness will ever be eliminated. But shit happens.

  6. Conscience of a Conservative

    It does make a certain amount of sense, in that the cost of the mortgage including foreclosure should be reflected in the rate. Agree that this is kind of ass-ackwards in that the long delays are the result of the banks not foredclosing properly in the first place which has created the back-log and delays.

    1. Mel

      Applying ordinary market theory: if you buy property in a state that tries to insist that foreclosures be justified, then you stand a better chance of keeping what you paid for. That’s got to be worth something to you.

    2. Yves Smith Post author

      It’s ALREADY reflected in the rate. Adam Levitin has written that rates in judicial FC states are a half a point higher than in non judicial FC states. So this is basically doubling up.

      1. S Bayer

        This is an important point. What DeMarco is arguing is that FHFA’s judgement of credit risk should override the market’s.

        Note that the FT article did not reference the proposed rule itself. This may be found here


        Public comment should be directed to

        FHFA OPAR, 400 Seventh Street SW., Ninth
        Floor, Washington, DC 20024

        and reference FHFA Notice No. 2012-N-13,

        or emailed to gfeeinput@fhfa.gov

  7. Tom

    Maybe unrelated but.
    I hear on news outlets glee that housing prices in the US are moving up – can’t understand why people are happy about it at all. Is it not true that humans need food, water and shelter to survive (a place on this planet to survive like – Land). I would think that rising costs in any of the ‘big three’ required for survival would lower available ‘money’ for other things we consumers would like to have as a society/civilization – transportation, clothes, access to medical care, education, communications – the commons etc. that other people produce in exchange for value (money). I really don’t see why civilization really would want to support the mis-allocation of money to the gambling tables our financial geniuses (criminals) erected and who screwed the global economy and free markets in the first place. Just seems like we humans like to inflict unnecessary pain upon ourselves.
    I guess the evolutionary process by which monkeys made men of themselves was considerably slower than the reverse process.

    1. jake chase

      Unfortunately, the civilized people are rarely consulted and an overwhelming majority of politicians are for sale. Don’t blame the monkeys, who are doing the best they can after having been dealt a very bad hand.

      1. ebear

        Unfortunately, the overwhelming majority of people aren’t really civilized. All it takes is a little want and hunger to strip away that veneer.

        Frankly, I find it comical that people here want to root for the little guy, as if being little, in itself, somehow confers virtue. Sure it’s sad they get squashed and stuff, but would it really be any different with them running the bulldozer?

  8. grayslady

    Thanks for explaining this, Yves. The Chicago Tribune had an article on this the other day but, as usual, there was no explantion of the “why”.
    You know you’re getting old when you can remember the time that rates on mortgages were based on perceived risk, amount of down payment and other basic lending considerations. Now it seems that it’s all about how fast the lender can foreclose.
    Is FHFA even interested in supporting home ownership? I know Obama isn’t.

      1. liberal

        “Home” ownership is a losing proposition, because homes (ie, houses) depreciate in value over time.

        It’s the _land_ under the homes that people want to get their hands on.

  9. Susan the other

    I think a little Tea Party would be nice. We would have the support of the courts too because nothing makes the court more angry than fraud on the court. It completely destroys any semblance of justice. And that is what the servicers and banksters are trying to get away with. You know the FHFA really is Timmy’s friend when it advocates crap like this – to rescind certification procedures established generously to give the banksters time to get their documents right with the law – and they haven’t been able to do so. So a new fee will be imposed to compensate the act of fraud for the expense it incurs in a court of law (which is otherwise not mentioned anywhere). The solution which should be sought by the FHFA and it’s secret friend Timmy is the hosing out of fraud at its source. And all such necessary fees should be imposed on the fraudsters.

    1. Susan the other

      Actually I think we should just cut the mortgage industry off right now. Tell the middle men – banksters and servicers – to close it down. All they do anyway is sell their fraudulent securitizations to pension funds. Let’s go straight to the pension funds. It is a solution, a long term solution, for the pension funds and the borrowers alike.

    2. Stupendous Man - Defender of Liberty, Foe of Tyranny

      I’ve no ideas of your background or persoanl experience but I have seen virtually no support for this comment of yours;

      “We would have the support of the courts too because nothing makes the court more angry than fraud on the court.”

      My court stated, in open court and on the record, that it had no interest in anything relating to fraud, forgery, perjury, etc.

      1. Capo Regime


        Have seen what you note first hand as well. There are no safe havens and very few if any honest institutions left. Its astounding that people still have hope for change via the ballot box and or the courts. Its a corrupt system throughout and even when some sense of honesty is present it is overridden by practical factors–courts are clogged, hundreds if not thousands of cases waiting. Courts are not the place of courtroom tv dramas they tend to be dumpy flourescent lit rooms with distracted and or overwhelmed judges who for the most part just want to whittle down cases in thier que.

      2. Susan the other

        SM. I do know the courts have been screwing people blind and blindly favoring the banks. I didn’t write that to extoll the courts. But some courts, like the NY courts, MA, and various decisions across the country actually come down on the side of the law and the evidence. We need to get rid of the entire bank mortgage industry. The only reason we don’t is because the banks have no other business. They are actually dependent on their fraud right now. It’s awful.

  10. Warren Celli

    I like it!

    Surcharges on slow pays!

    Its about effing time!

    It feeds the perpetual conflict and makes it more obvious that Pernicious Greed for Destruction Xtrevilism has really cleaned good old fashioned Vanilla Greed for Profit Evilism’s clocks. It also has a nice bankerly ‘red lining’ feel to it with the increased rates in; New York, New Jersey, Illinois, Florida and Connecticut. Yes, of course, let’s red line now and make it tougher to borrow in those ‘dead beat states’ — Yo! Turn up the demonizing machine! — and further divide the nation. What color are those states any way? Are they red, blue, or purple? And WHAT color are the people that live in them? What is their average height? Are bankers loaning to mental midgets now? OMG!

    This is also a truly great precedent setter that can be applied to FICO slave rating scores that already divide and grade the slaves by their credit history (read potential for a good ass fxxucking here). Now whole states with low FICO scores can be branded as deadbeat non compliant to the will of the central Xtrevilist master states and higher fees can be imposed on loans made in those states. Then of course we can apply those state red lines to whole neighborhoods. This will help in securitizing pay day loans in the high frequency real time micro fxxk you up the ass pay day loan market.

    The scum on the pond is banker green,
    Thicker now than ever before seen,
    It blocks the light to all that’s below,
    The death of their spirits is controlled and slow…

    What day does Banker Freedom Day fall on this year? Will it ever arrive?

    Jake Chase you got it cold — scam rule of law!

    Now if we can all wake up to the intentional nature of it all.

    Deception is the strongest political force on the planet.

  11. Capo Regime

    As an aside perhaps am a bit of a prude but it seems of late a lot more obscenity laced posts are making their way to NC. I wonder if its a sign of the times or if the influence of NC has risen to the point where more trolls are being dispatched to comment?

  12. F. Beard

    Ya know if the enforcement of the law threatens the economy then either the laws are bad, the economy is not fundamentally stable or BOTH.

    I’ve seen this at work; when the project deadline was threatened then the rules were thrown out the window.

  13. C

    Purely as an informative question, are there any laws or regulations that the FHFA is charged with enforcing but does not. I’m not talking the actions they could take such as writing down mortgages but more akin to pulling a Lanny Bruer or following the IRS’s blinders lead.

  14. Richard Davet

    FHFA foremerly known as OFHEO:

    PO Box 10092
    Cleveland, OH 44110

    February 27, 2006

    The Honorable Warren B. Rudman
    Paul, Weiss, Rifkind, Wharton & Garrison, LLP
    1615 L Street, NW, Suite 1300
    Washington, DC 20036-5694


    Dear Senator Rudman:

    I have completed my initial review of your Report and have come away with the impression that you and your firm were duped by the Board of Directors of Fannie Mae and quite possibly OFHEO officials.

    Since 1996, I have been in contact with the Audit Committee of the Board of Directors at Fannie Mae pursuant to their fiduciary responsibilities to shareholders and stakeholders, reporting to the committee the mischief of management. Despite being repeatedly assured by members of the Audit Committee and members of management that my concerns were dutifully being taken up at Audit Committee’s meetings, they appear nowhere in your Report. I also have had numerous correspondence with OFHEO which to date has fallen upon deaf ears.

    The gist of my reporting to the Audit Committee reflects the concern of shareholders and stakeholders at the very core of Fannie’s business and to the fundamental problem prompting the “creative” accounting you referred to in your Report at all levels of Fannie . Specifically, I am referring to Fannie Mae being the “mother” of all what has come to me know as predatory lending practices which are only cursorily mentioned in your Report.

    Mother Fannie, as you are aware, in their annual effort to secure the implicit guarantee of the US Treasury, proffers to congress on an annual basis its Servicer/Guidelines as an explanation of why congress should not concern itself with safety and soundness issues when it comes to Fannie Mae’s business . Mother Fannie touts that all Seller/Servicers are contractually bound to adhere to those Guidelines which should abate any anxiety of those concerned about safety and soundness issues. Only one problem…..no one audits for compliance with those Guidelines which is the very reason why our courts across the country have been burdened with vast increases in foreclosure lawsuits.

    Page 2

    Monday, February 27, 2006

    The Honorable Warren B. Rudman

    Attendant with the predatory lending practices are the issues of ownership, debt collectors calling themselves “servicers”, agents, nominees, lost notes, holders, Fannie’s reliance on the errant servicers financial information, etc. all words and actions that would confuse any CPA as to the location of debt which, in turn, reeks havoc with financials.

    My contact with the Audit Committee of the Board of Directors of Fannie Mae depict a different scenario that what is projected by your Report, that is, the culprits are gone and the current folks are cooperative. Specifically, in my instance I am referring to the fact that current Audit Committee members as well as current members of management including corporate secretary Phil Weber have been complicit with in allowing predatory lender Nationsbanc Mortgage Corp. to perpetrate a fraud against me under the color of law. In support , I am attaching my correspondence with the Audit Committee of Fannie of October 21, 2005 as well as November 7, 2005, which to date I have had no response nor are they alluded to in your Report as mandated by Sarbanes Oxley pursuant to the Audit Committee’s fiduciary responsibilities. FYI, I am also attaching my correspondence to the members of the Audit Committee of seller/servicer Nationsbanc Mortgage Corp. reporting their conduct in their campaign IN TERROREM being waged against me. If the thought that I might be unique has entered your mind , please visit a website called http://www.msfruad.org.

    There is no doubt in my mind that that “Mother” Fannie has allowed and in fact have encouraged the predatory lending practices that have bogged down America’s court system. The likes of which the Nationsbanc’s, Ameriquest, Ocwen, Fairbanks, EMC Mortgage, etc. could all be held accountable by Mother Fannie tomorrow by virtue of their contractual Agreement to abide by Servicer Guidelines. Frankly speaking, the $10.5 billion reported meltdown thus far at Fannie is miniscule compared with the liability inherent in their failure to mandate compliance with the Seller/Servicer Guidelines which would be placed on the doorstep of the American taxpayers.

    As a shareholder, stakeholder in Fannie Mae as well as being a taxpayer I would like to ask you to amend your Report to insist that Fannie’s Seller/Servicers Agreements be immediately audited for compliance and that Congress refuse any implicit or explicit guarantee of the US Treasury until Fannie is complaint with

    Page 3

    Monday, February 27, 2006

    The Honorable Warren B. Rudman

    this request. I stand ready to assist you and your staff in formulating a procedure to accomplish this task.

    Please confirm your receipt of this correspondence as well and giving me an outline of your anticipated course of action.

    Thank you.

    Sincerely yours,


    Richard Davet

    Encls. 10-21-05 Corresp Audit Committee FNMA
    11-07-05 Corresp. Audit Committee FNMA
    02-15-06 Corresp. Audit Committee, Nationsbanc Mortgage Corp.

    P.S. I would appreciate you sending me the name(s) of the individuals charged with the criminal investigations in this matter so they possibly might help me as a victim of Fannie.
    Cc: SEC
    The Federal Reserve Board
    The Federal Deposit Insurance Corporation
    Ohio State Regulators
    Deloitte & Touche
    Board of Directors, Fannie Mae
    Congressional Representatives

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