I am not really sure what they are trying to say here....

Servicing Guide, Part VII, Section 501.03: Allowable Attorney Fees, and Part VIII,
Section 104.04: Attorney (or Trustee) Fees

Effective September 1, 2010, Fannie Mae is prohibiting servicers from directly or indirectly requiring or encouraging attorneys or trustees to use specified vendors in connection with Fannie Mae referrals, including, but not limited to, title companies, posting and publication vendors, and service of process vendors.  Attorneys and trustees must be allowed to select vendors of their choice based on their assessment of factors such as the cost efficiency, quality, reliability, and timeliness of the services provided by the vendor.

Fannie Mae is also reminding servicers that their arrangements with vendors and other service providers, particularly affiliates, must not be tainted with an actual or perceived conflict of interest.  Fannie Mae requires servicers, attorneys, and trustees to use the most cost-efficient and effective vendors to assist in processing Fannie Mae foreclosures and bankruptcy cases without regard to arrangements that could provide a financial benefit directly or indirectly to servicers.

If an attorney or trustee wishes to use a vendor that is either the servicer itself, an outsourcing company, or other third-party vendor utilized by the servicer to assist in servicing defaulted mortgage loans, or an affiliate of the servicer, outsourcing company, or third-party vendor, the attorney or trustee must obtain Fannie Mae's prior written approval. Requests for approval must be directed to retained_attorney@fanniemae.com

and.....

Attorney or Trustee File Transfers

Part VII, Section 501: Selection of Bankruptcy Attorneys and Avoiding Delays in Case Processing, and Part VIII, Section 104: Referral to Foreclosure Attorney/Trustee

Effective immediately, Fannie Mae's prior written approval is required for the transfer of any files from one law firm or trustee to another. Fannie Mae reserves the right to assess compensatory fees for delays caused by unauthorized file transfers and to deny reimbursement of fees and expenses with respect to mortgage loans that are the subject of unauthorized file transfers. Requests for authority to transfer files must be sent via e-mail to retained_attorney@fanniemae.com.

Now I have read this over and over again and I am not sure who would fall into the catagory of affilliates, but I do know for a certain fact that if the law firm hired to conduct the foreclosure or handle the bankruptcy or both has used the services of a title company that they own for conducting the settlement on the property after the foreclosure has been complete, they are not only perceived as having a conflict of interest, there is an actual conflict of interest.  How can one not say that if the attorney firm/trustee has used the services of one of the entities that they own or control that there is no conflict of interest.  Additionally, if the servicing attorney/trustee reaps a portion of the fees associated with the closing of the REO transaction there is still a question of whether or not there are RESPA violation as they relate to "kick-backs". 

In reviewing the information that speaks to the transfer of files from one law firm to another, does this not beg the question, why would an attorney feel the need to transfer the work to another law firm?  Just asking given the raft of litigation that has recently been filed......

In light of all of the current or pending class action law suits pending nationwide relating to the foreclosure mills activities of late are we surprised by these announcements?