AG Coakley Sues Fannie Mae and Freddie Mac Over Their Refusal to Engage in Foreclosure Buyback Programs - FORECLOSURE FRAUD

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AG Coakley Sues Fannie Mae and Freddie Mac Over Their Refusal to Engage in Foreclosure Buyback Programs

AG Coakley Sues Fannie Mae and Freddie Mac Over Their Refusal to Engage in Foreclosure Buyback Programs

For Immediate Release – June 02, 2014

AG Coakley Sues Fannie Mae and Freddie Mac Over Their Refusal to Engage in Foreclosure Buyback Programs

Lawsuit Alleges Violation of State’s 2012 Anti-Foreclosure Law

BOSTON – Saying its refusal to engage in foreclosure buyback programs is unfairly and illegally causing Massachusetts families to lose their homes, Attorney General Martha Coakley has s ued the Federal Housing Finance Agency (FHFA) and the mortgage giants Fannie Mae and Freddie Mac pdf format of Commonweath v FHFA et al. file size 5MB for violating the state’s 2012 foreclosure prevention law.

Filed today in Suffolk Superior Court, the complaint pdf format of Commonweath v FHFA et al. file size 5MB alleges that Fannie Mae and Freddie Mac, currently under FHFA conservatorship, refuse to comply with the August 2012 Massachusetts law An Act to Prevent Unnecessary and Unreasonable Foreclosures. The first-in-the-nation law was proposed by AG Coakley and passed by the Legislature in response to the foreclosure crisis in an effort to prevent unnecessary foreclosures. Among other provisions, it prohibits creditors from blocking home sales to non-profits simply because the non-profit intends to resell the property back to the former homeowner.

One example of a buyback program, as cited in the complaint, is Boston Community Capital’s (BCC) “Stabilizing Urban Neighborhoods” Initiative (SUN). As part of the program, the organization buys foreclosed, bank-owned homes at their present market value and sells the properties back to the original homeowners if they qualify for affordable financing. 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.

“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,” AG 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.”

Since 2012, AG Coakley has encouraged principal reduction by Fannie and Freddie as a critical foreclosure prevention tool. In an April 2012 letter to then-Acting FHFA Director Edward DeMarco, AG Coakley was joined by 10 other Attorneys General urging Fannie and Freddie to permit principal reduction in loan modifications. Despite a change in leadership, Fannie and Freddie continue to prohibit principal reduction.

AG Coakley sent another letter last month to FHFA’s new Director, Melvin Watt, stating that the current policies are in direct conflict with Massachusetts law and represent an economic loss for taxpayer-owned Fannie and Freddie.

In the complaint, filed today and citing the case Suero v. Freddie Mac, AG Coakley alleges that two of FHFA’s policies violate state law. Fannie and Freddie’s “arm’s length transaction” policy prohibits property sales to non-profits who resell to the original homeowner. 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.

Both SUN and the 2012 law were cited in a decision by the U.S District Court to issue a preliminary injunction in Suero v. Freddie Mac, preventing the foreclosure and sale of the Suero’s home in Dorchester. The decision also referenced a February 2013 letter the AG’s office sent to FHFA explaining that Massachusetts law now explicitly forbids banks and other servicers from rejecting offers from legitimate buyback programs merely because the property will be resold to the former homeowner.

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source: http://www.mass.gov

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