Massachusetts Attorney General Martha Coakley has sued the Federal Housing Finance Agency (FHFA) and mortgage giants Fannie Mae and Freddie Mac, alleging the companies’ refusal to engage in foreclosure buybacks programs is “unfairly and illegally causing Massachusetts families to lose their homes.”
Filed Monday in Suffolk Superior Court, the Massachusetts AG’s suit alleges that Fannie Mae and Freddie Mac refuse to comply with an August 2012 state law.
Buyback programs, in this instance, are used by non-profit organizations to buy a foreclosed property to resell it back to the original owner at a more affordable price. The aforementioned state law prohibits creditors from blocking such programs.
The recently-filed suit alleges the two GSEs have failed to comply with the law due to policies that prohibit property sales to non-profits in order to resell the property to the original homeowner.
“It makes no sense for our federal government to stand in the way of this work to help struggling families stay in their homes, and it is illegal for Fannie and Freddie to do this in Massachusetts,” Coakley said. “For too long, Fannie and Freddie have been roadblocks to progress in addressing this foreclosure crisis, and I urge them to immediately reverse their policy on this common-sense program.”
One example cited in the complaint is Boston Community Capital’s Stabilizing Urban Neighborhoods (SUN) Initiative. The program buys back foreclosed, REO properties at present market value and sells them back to homeowners.
“Buyback programs like SUN prevent needless displacement of families that through an arrangement with a non-profit can afford to stay in their homes. Fannie Mae and Freddie Mac have continued to block buybacks even though they lose money in the process,” the AG’s office said in a release.
Representatives for Fannie Mae and Freddie Mac offered no comment, citing pending litigation.