A U.S. district court judge in North Carolina has ordered Fannie Mae to forfeit $6.5 million in funds the secondary-market agency received from a convicted mortgage lender who defrauded Ginnie Mae of nearly $30 million.As part of the criminal proceeding against James McLean, investigators from the Department of Housing and Urban Development's Office of Inspector General traced the "criminally derived" funds to Fannie Mae. When Fannie directed Mr. McLean, who owned First Beneficial Mortgage Corp. in Charlotte, N.C., to repurchase some bad loans (which had been originated using straw borrowers), Mr. McLean sold the same false notes to Ginnie Mae to repay Fannie. As reported by The Wall Street Journal, Fannie did not inform regulators about the fraudulent loans. "They were not being a good corporate citizen by keeping that information to themselves," a HUD IG official said. Fannie recently received a 60-day extension to comply with the judge's order. "We will be reviewing the facts and, once we have completed the review, we will be working with the U.S. attorney's office to resolve any issues," Fannie spokesman Brian Faith said.

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