HUD: Mills? What Foreclosure Mills?

| Mon Sep. 27, 2010 3:15 PM EDT

"Why is Fannie Mae using lawyers that are accused of regularly engaging in fraud to kick people out of their homes?" asked three Democrats in the House of Representatives, including Barney Frank of Massachusetts, chairman of the financial services committee, in a recent letter to Fannie Mae, the government-owned housing corporation. As of late, Fannie, its twin Freddie Mac, and big banks have come under fire for hiring controversial law firms to handle foreclosures, also known as "foreclosure mills." (You can read my investigation into the mills, including one Grayson cites, the Law Offices of David J. Stern, here.)

Given all the uproar surrounding these foreclosure firms, and the fact that they've been doing business for decades, you'd think they'd be on the radar of the government's main housing agency, the Department of Housing and Urban Development. Well, think again.

In July, a West Palm Beach, Florida-based legal analysis company, Legalprise, filed a Freedom of Information Act request with HUD, the Securities and Exchange Commission, and the Federal Trade Commission, asking for all records pertaining to regulation of these firms. A pretty wide net, in other words. Yet one of Legalprise's principals, Michael Olenick, today emailed me HUD's response letter, which surprisingly says they have nothing: "A search of Headquarters' records by knowledgeable staff failed to locate any documents at HUD Headquarters that would be responsive to your request," the letter reads.

Hmm, that's odd. Does the agency that for so long oversaw Fannie and Freddie, each of which retain a stable of handpicked law firms (some facing heavy criticism) to litigate foreclosures as fast and cheaply and efficiently as possible, have no records at all concerning these firms? Not a single memo or email? That's hard to believe.

Below are Legalprise's initial FOIA request and HUD's response.

Legalprise HUD FOIA

HUD-FHA Response Legal Prise

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