Industry News

Fannie Mae to pay $7.5 million in loan fraud case

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Fannie Mae has agreed to pay the government $7.5 million to settle a case in which the mortgage giant allegedly knowingly accepted proceeds of a mortgage scam. The company did not admit wrongdoing in the consent order announced Wednesday, according to news sources. A federal judge in Charlotte, N.C., had previously ordered Fannie Mae to forfeit $6.5 million in funds determined to have come from fraudulent activities by First Beneficial Mortgage Corp. in North Carolina. First Beneficial obtained the funds to repay Fannie Mae by selling them to Ginnie Mae, which guarantees mortgage-backed securities composed of federally insured or guaranteed loans. In the 1990s, Fannie Mae bought millions of dollars worth of mortgages from First Beneficial. When Fannie Mae learned the mortgages were fraudulent, it demanded that First Beneficial buy them back, which it did by selling the same loans to Ginnie Mae. After that news came to light in November, three U.S. lawmakers sent a letter to Fanni...