The Federal Housing Finance Agency (FHFA) Inspector General said that Fannie Mae did not give Bank of America Corp. special consideration when it agreed to pay the lender more than $500 million to transfer the servicing of 384,000 high-risk mortgages to firms more likely to prevent their foreclosure, Bloomberg News reported today. Still, the taxpayer-owned company paid more than legally required to Bank of America and 12 other lenders when it spent $1.5 billion in termination fees for servicing rights on 1.1 million loans between 2008 and 2011, according to the inspector general's report released today. The transfers were part of a Fannie Mae initiative designed to reduce losses on mortgages considered at greatest risk of default. The specialty servicers that Fannie Mae hired to handle the loans, including Ocwen Financial Corp. and Nationstar Mortgage LLC, typically do more outreach to distressed borrowers than regular servicers and have a better track record of keeping loans current. "The amount Fannie Mae paid was consistent with the amounts it had paid to other servicers from which it had purchased mortgage-servicing rights under the program," the inspector general reported. Bank of America ultimately received $421 million in the 2011 deal because some of the loans were paid off or refinanced by the time it was completed.
