With Fannie Mae's Help: Homeless Woman Approved for $470,000 Mortgage

E Finance Directory reports on Fannie Mae:

Government agencies and commissions across the nation are investigating an increasing number of mortgage fraud complaints.

One of the most interesting stories came from a hearing held on February 13 by the New York State Commission of Investigation. Testimony was given by Suzette Francis who claims she was a victim of mortgage fraud.

In 2006, Francis was living in a homeless shelter in Queens, New York after losing her job. She found a new job as a security guard and approached the principal of her child's school to ask about getting an apartment.

The principal--who was also in the real estate biz--told her that she did not know of any available apartments but that she did know of a house for sale. She then helped Francis, who was earning a modest $10 an hour at the time, get approved for a $470,000 adjustable rate mortgage through a 'special Fannie Mae program' in October of 2007.

The woman who set everything up fudged the mortgage application by inventing false income and claiming that Francis worked for the school. The fraud was necessary because Francis could not reasonably make the monthly mortgage payment of $4,517 on what she actually earned.

Since living in the house, she has not made any mortgage payments. The home is now in foreclosure and Francis has learned that she also owns a second home that was also purchased with fraudulent documents. Francis admits that she does remember being asked to sign additional paperwork at one point but that she was told it was for the first house.

No charges have been filed yet against the woman who supposedly initiated the fraud and Francis is still living in the foreclosed home. The New York State Commission of Investigation, which is a bipartisan independent body, is investigating this case and others in a series of hearings. The investigations are a direct result of increased complaints, according to commission chairman Alfred Lerner.

Fannie Mae sure is in the leverage business with their "special programs".