Federal mortgage giant Fannie Mae has cut ties with a second South Florida law firm handling its foreclosure cases, requiring an immediate transfer of those files to other attorneys and likely causing more turmoil in the state's foreclosure courts.
The termination of its relationship with the Fort Lauderdale firm of Ben-Ezra & Katz, P.A. was announced today in a notice to loan servicers. The notice says payments to the firm should be stopped immediately and gives servicers a Feb. 15 deadline to find new firms to handle the Ben-Ezra & Katz files.
"Fannie Mae has become aware of certain document execution issues at the Ben-Ezra law firm regarding its processing of foreclosure cases on our behalf," said Fannie Mae spokeswoman Amy Bonitatibus.
"It is our expectation that law firms will handle matters in strict compliance with proper procedures, ethical codes of conduct and legal requirements."
Ben-Ezra & Katz has represented banks in 508 Palm Beach County foreclosure cases in the past two years where the homes were ordered to auction.
In a statement, Ben-Ezra & Katz said it was disappointed and surprised by Fannie Mae's decision, and that the issues Fannie Mae is referring to were technical paperwork problems that the firm is correcting.
"When problems of foreclosure files surfaced last fall, we hired an outside law firm to conduct an audit of our processes and procedures," the statement said. "It is ironic that in trying to make sure we were doing everything correctly, we reached this position with Fannie Mae."
The move by Fannie Mae follows its November firing of David J. Stern's Plantation-based law firm, which is one of four so-called "foreclosure mills" under investigation by the Florida attorney general's office.
Ben-Ezra & Katz is not one of those firms, nor was it included in a more recent attorney general query of three additional firms regarding their foreclosure practices.