The attorney general (AG) of Massachusetts, Martha Coakley has
) for violating state anti-foreclosure law. The case, filed in
Suffolk Superior Court, also named the Federal Housing Finance
Agency, the U.S. regulator that oversees these two
Government-Sponsored Enterprises (GSEs), as a defendant.
Fannie and Freddie are accused of not allowing properties to enter
buyback programs even though prevention of such initiatives proves
to be expensive for these GSEs. The AG alleged that two of the
policies of Fannie and Freddie violate the Massachusetts law called
'An Act to Prevent Unnecessary and Unreasonable Foreclosures'.
One of them, the 'arm's-length transaction' forbids these GSEs from
allowing the sale of properties to nonprofit organizations as these
residential properties will again be sold to its previous owner.
The second 'make whole' policy stops Fannie and Freddie from
accepting anything less of the loan amount from the former
homeowner or anyone else who is seeking to re-sell the property to
the earlier owner.
These policies are preventing Massachusetts from averting
foreclosures and save borrowers from distress. Notably, the
above-mentioned lawsuit is just one of the numerous that the AG has
filed to scrutinize controversial financial operations and see to
it that the affected investors are compensated.
The AG has settled several lawsuits against major global banks
Bank of America Corporation
), The Goldman Sachs Group, Inc., Morgan Stanley, The Royal Bank of
Scotland Group plc,
) and JPMorgan Chase & Co. The settlements primarily pertained
to overall mortgage lending practices prevalent in the state
preceding the financial crisis.
Whatever be the outcome of the aforesaid case, the distressed
homeowners should get some support to prevent foreclosures. This in
turn will aid further recovery of the housing market.
Currently, both Fannie and Freddie carry a Zacks Rank #3
Want the latest recommendations from Zacks Investment Research?
Today, you can download 7 Best Stocks for the Next 30 Days.
Click to get this free report
FREDDIE MAC (FMCC): Get Free Report
BARCLAY PLC-ADR (BCS): Free Stock Analysis
FANNIE MAE (FNMA): Get Free Report
BANK OF AMER CP (BAC): Free Stock Analysis
To read this article on Zacks.com click here.