Fannie Mae has booted Florida-based foreclosure law firm Ben-Ezra & Katz from its retained attorney network after noticing that the firm was not handling its matters in strict compliance with proper procedures, ethical codes of conduct and legal requirements.

We have terminated the firm, a spokesperson for the government-backed mortgage lender said in a statement. The spokesperson said Fannie Mae has found that the firm did not comply with the law in matters of execution of certain documents.

Fannie Mae has directed all mortgage servicers not refer any future Fannie Mae matters to the firm, to transfer foreclosure matters of Fannie Mae to other law firms in its attorney network by Feb.15, and suspend all payments outstanding to Ben-Ezra.

In a statement, Ben-Ezra said it was disappointed by Fannie Mae's decision as it had acted proactively in the matter by both informing Fannie Mae of the problem as well as the measures it plans to take to correct it.

We are extremely disappointed at Fannie Mae's decision to stop using the firm's services. We are also surprised by the action, since the issues leading to their action are things we discovered internally, then proactively informed Fannie Mae and created a plan to correct the problems, the law firm said.

There is no issue of whether the information in the affected files is correct. No homeowner has been hurt because of this. These are technical paperwork issues – not a question of whether filing the foreclosure was appropriate. The question is whether the correct original affidavits were attached to each file. We created a remediation plan that we felt would have been in the best interest of Fannie Mae, the mortgage companies, the courts, and borrowers.

When the problems of foreclosure files at other firms surfaced last fall, we hired an outside law firm to conduct an audit of our processes and procedures. It is ironic that in trying to make sure we were doing everything correctly, we reached this position with Fannie Mae.

According to SunSentinel.com the termination of relationship by the government-owned mortgage giant has prompted Ben-Ezra to layoff nearly half of its 568 employees.

This is the second law firm Fannie Mae has booted from its attorney network after the robo-signing controversy broke out last October. Following the controversy, many state courts including those in New York and Maryland have implemented measures to hold lawyers responsible for the accuracy of the underlying documents in foreclosure actions.

The Law Firm of David J. Stern in Plantation was deleted from Fannie Mae's roster of lawyers after discovering document process irregularities.