Statement by Terry Edwards, Executive Vice President of Fannie Mae, on Policy Outline for Dealing with Possible Foreclosure Process Deficiencies

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Oct 13, 2010, 03:10 ET

WASHINGTON, Oct. 13 /PRNewswire-FirstCall/ -- Fannie Mae fully endorses the Policy Outline for Dealing with Possible Foreclosure Process Deficiencies released today by the Federal Housing Finance Agency. These principles reinforce the directive issued by Fannie Mae last week, requiring our servicers to undertake a review of their policies and procedures relating to the execution of affidavits, verifications, and other legal documents in connection with the default process.

We continue to expect prompt execution of our directive. A servicer's failure to comply with any provision of law, or any provision of our servicing requirements, constitutes a breach of the servicer's contractual agreements with Fannie Mae. Our servicers are obligated to adhere to all legal requirements as part of the foreclosure process. They must inform us of and rectify any issues that may arise in this regard.

Fannie Mae recognizes that foreclosure is an extremely difficult experience for affected homeowners and we are working to ensure borrowers are treated fairly and respectfully. Fannie Mae has halted foreclosures, evictions, and REO sale closings when necessary for a servicer to perform required remediation. Our actions are intended to protect the rights of borrowers facing foreclosure, enable a fair and equitable legal process for all impacted parties and allow new homebuyers to close on their transactions in a timely manner. These steps will also help ensure the proper functioning of the mortgage market overall so as to meet our goals of maintaining liquidity in the market and minimizing taxpayer exposure.

Fannie Mae exists to expand affordable housing and bring global capital to local communities in order to serve the U.S. housing market. Fannie Mae has a federal charter and operates in America's secondary mortgage market to enhance the liquidity of the mortgage market by providing funds to mortgage bankers and other lenders so that they may lend to home buyers. Our job is to help those who house America.

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SOURCE Fannie Mae