Despite receiving billions of dollars through a federal bailout, mortgage giant Freddie Mac continues to ignore its customers when they lodge serious complaints about fraud or rule-breaking, leaving taxpayers potentially exposed to new threats, investigators warn.
Between Oct. 2011 and Nov. 2012, Freddie Mac and its eight largest loan servicers received more than 34,000 serious complaints. Also called “escalated cases,” they cover customers who accuse Freddie Mac of fraud, lawsuits designed to intimidate home owners and other inappropriate conduct.
The company is supposed to report and respond to these problems. But investigators found a culture inside the mortgage giant and its partners that largely ignored customers, according to a report released Thursday.
Freddie Mac’s four largest service providers – Bank of America, CitiMortgage, Provident and Wells Fargo Bank - never reported more than 20,000 escalated cases, roughly 60 percent of the total received. And almost a quarter of the total cases were not dealt with in the required 30-day window.
Plus, the federal agency that oversees the mortgage giant – the Federal Housing Finance Agency, or FHFA – has often been relying on Freddie Mac’s own reporting to ensure compliance with customer service, leaving government oversight severely lacking.
“Servicers, Freddie Mac, and FHFA have not adequately fulfilled their respective roles relative to…addressing and resolving escalated consumer complaints in a timely and consistent manner,” said a report by the FHFA’s inspector general, the agency's internal watchdog. “Strengthened oversight - through actions aimed specifically at improving servicer compliance with escalated case requirements - can benefit homeowners, Freddie Mac, and ultimately taxpayers.”
Representatives for Freddie Mac did not return calls seeking comment, and no response from the company was included in the inspector general’s report.
The mortgage agency hasn’t taken any efforts to fix the problems, investigators said. No plans have been developed to discover if customer complaints are true, and Freddie Mac hasn’t fined or penalized its agents that don’t report escalated cases.
But the government agency that oversees the mortgage giant – the FHFA – also hasn’t been doing its job, the inspector general said. FHFA officials didn’t do their own investigating of how Freddie Mac was handling customer accusations of fraud. Instead, the inspector general said the government officials relied on Freddie Mac’s own reports and took them at face value.
“FHFA’s failure to conduct independent testing of servicer compliance resulted in its reliance on incomplete data supplied by Freddie Mac,” the inspector general said.
Agency officials said they are working to improve oversight. “FHFA’s appreciates and concurs with the importance of ensuring timely and responsive resolution of customer complaints, particularly complaints of a more serious nature deemed to be ‘escalated cases,’” FHFA said in a response to the report.
Freddie Mac is a giant in the home ownership business, owning or guaranteeing more than 10.6 million mortgages worth $1.6 trillion.
Some cockroaches only take five years to evolve to avoid poison.
A Philly bike courier takes his cat on cycling adventures. (Videos)
Which big cat had some trouble coughing this up? (Photos)
Clothes have a starring role at the Cannes Film Festival. (Photos)