By Kyle Chezum Updated on 10/25/2010

Fannie Mae and Freddie Mac are moving much of their loan modification work to smaller firms as legal tensions with major banks grow in the wake of foreclosure fraud litigation.  Servicing transfers on such a large scale will cost banks some profit but will likely save taxpayers money.  Over the past month, Fannie Mae has transferred 200,000 loans to smaller modification companies, and the trend is expected to continue.

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