After Nye Lavalle lost his family home to foreclosure in circumstances that he suspected to be fishy, he listed out improprieties on the part of the mortgage giant Fannie Mae at a time when home prices were at the peak in 2003. What he figured out at that time was almost a carbon copy of the foreclosure revelations that are taking place today.

 

Lavalle’s dossier revealed that false foreclosure documents were being filed routinely by some loan-servicing companies that worked for Fannie Mae in the same fashion that fraudulent “robo-signing” paperwork was being done. He observed that the electronic mortgage registry was dubious in its dealings and this has now been belatedly recognized by the courts. 

 

Lavalle corresponded with Fannie executives and lawyers for two years and even hired a Washington law firm to investigate his claims, which were corroborated by the firm in May 2006. However, no serious action was taken by the management or board of Fannie Mae. Taxpayers have lost $150 billion so far due to this inaction. The Obama administration and Congress are now weighing the future of Freddie Mac and Fannie Mae.