Fed up Fannie and Freddie eye new workout firms

(Reuters) - Mortgage finance giants Fannie Mae (FNMA.OB) and Freddie Mac (FMCC.OB) are looking to more aggressively move loan workout duties to specialist firms as their frustrations with the big banks deepen, sources said.


Widespread criticism -- and federal and state investigations -- of big banks' use of inaccurate paperwork when foreclosing and their reluctance to ease payments for borrowers has created an opportunity for smaller companies to take on more of the lucrative business. Ten firms handled 80 percent of Fannie Mae's loans, of which 27 percent were in the hands of Bank of America (BAC.N), as of June.

The trend may result in big banks losing revenue as the now four-year mortgage crisis wears on, but it may help homeowners and save taxpayers money. Homeowners may end up with better care as they wind their way through the foreclosure process and taxpayers -- who support Fannie Mae and Freddie Mac -- may end up shouldering fewer losses from bad mortgages.

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