(Recasts, adds quotes)
BOSTON, June 2 Massachusetts on Monday filed a
lawsuit against mortgage finance giants Fannie Mae and Freddie
Mac, accusing them of violating state law by blocking
"foreclosure buyback programs" intended to help poor residents
keep their homes.
In a foreclosure buyback program, a non-profit organization
buys a foreclosed property and then resells it back to the
original owner at a more affordable price. Massachusetts passed
a law in 2012 prohibiting creditors from blocking such programs.
The lawsuit, filed in Suffolk Superior Court on Monday,
alleges Fannie Mae and Freddie Mac have
failed to comply with the law because they have policies that
prohibit property sales to non-profits that resell to the
The lawsuit also names the Federal Housing Finance Agency,
the regulator for Fannie and Freddie.
"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," the state's attorney general, Martha Coakley,
said in a press release announcing the suit.
"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," she said.
Coakley said she had approached Fannie, Freddie and the FHFA
on several occasions before filing the suit, asking they do more
to prevent home foreclosures and abide by Massachusetts state
law on buyback programs.
Officials at Fannie Mae and Freddie Mac were not immediately
available to comment. The FHFA declined comment.
(Reporting by Jonathan Stempel and Richard Valdmanis; Editing
by Leslie Adler)