Freddie Mac's chief operating officer took to the blogosphere Monday, defending the mortgage giant's response to foreclosure-gate and called the renewed confidence and normalization of the foreclosure process a major stride in attaining a "true housing recovery."
Bruce Witherell acknowledged, however, that the scandal has raised "serious concerns about the integrity of the foreclosure process."
Foreclosure-related properties currently account for 25% of all home sales, and inventory must move through the system before the housing market can recover, he wrote in a Freddie Mac blog post. (Visit:
"But we should not prevent legitimate foreclosures from going forward across the board because the underlying rationale for foreclosing—a borrower falling irreparably behind on mortgage payments—is unlikely to change even when documentation problems are resolved," he said.
Witherell attributed the paperwork issues to the unprecedented volume of foreclosures placing a "tremendous burden on servicers and foreclosure counsel."
He also defended Freddie's response to the issue and said the company recently instructed its nearly 2,000 servicers to review their practices and procedures.
"When we learned of documentation concerns at the Law Offices of David J. Stern, an outside law firm that specializes in foreclosures, we took swift action by suspending it from working on Freddie Mac loans until we completed our own investigation," he said. "Last week, we terminated our relationship with the firm and retrieved our loan files so we can transfer them to other counsel."
Freddie dropped the Stern law firm as a vendor on Nov. 2. The Florida Attorney General is investigating the firm, which recently terminated 700 workers.
