WASHINGTON, Dec. 9 (UPI) -- Housing-finance giant Fannie Mae will pay $7.5 million to the U.S. government after officials said the company knowingly participated in a scam.
Without admitting guilt, the mortgage lender agreed Wednesday to pay the money, which includes interest, after Justice Department allegations Fannie Mae took money from First Beneficial that it had scammed from Ginnie Mae, a government housing finance agency.
Years ago Fannie bought loans from First Beneficial that turned out to be phony. Those loans were not used to buy the houses identified on the notes, and the borrowers were fictitious. First Beneficial's former president and other executives were convicted on fraud charges in 2002.
When Fannie Mae learned of the deception it demanded to be made whole, something First Beneficial did by repeating the scam on Ginnie Mae -- with the full knowledge of Fannie Mae executives, the Justice Department says.
The big lender's troubles may not be over. Three House subcommittees want Fannie Mae to come clean with the names of all former or current officers who knew of the First Beneficial scam.
