Bay State AG sues FHFA and GSEs

Massachusetts Attorney General Martha Coakley has announced the filing of a complaint on behalf of the Commonwealth in a civil action against the Federal Housing Finance Agency (FHFA) and the government-sponsored enterprises Federal Home Loan Mortgage Corporation (Freddie Mac) and Federal National Mortgage Association (Fannie Mae) to compel them to comply with a Massachusetts law that forbids banks and lenders from refusing to allow the sale of homes in foreclosure to non-profit organizations if the property will be resold or leased by the non-profit to the former homeowner. In the complaint, the Commonwealth alleges that two of FHFA's policies violate state law. Coakley asserts that Fannie and Freddie's "arm's length transaction" policy prohibits property sales to non-profits who resell to the original homeowner, and the "make whole" policy has the same effect, as it prevents Fannie and Freddie from accepting anything less than the outstanding loan amount from the former homeowner or anyone seeking to resell or rent to the former homeowner.