California AG Sues Fannie and Freddie
California Attorney General Kamala Harris is suing Fannie Mae and Freddie Mac in an effort to force the companies to turn over documents they have refused to provide for her investigation into their mortgage foreclosure practices.
Hot Feature: NAR Cuts Figures for Existing Homes Sold Since 2007
Harris served the housing finance companies with administrative subpoenas on November 15, but their regulator, the Federal Housing Finance Agency, told her office on December 9 that “no state Attorney General had the authority” to issue such a subpoena.
Harris filed lawsuits in California Superior Court in San Francisco on Tuesday seeking to obtain the withheld information. “The conservator’s position is incorrect,” Harris said in the lawsuit, adding that no law exempts the companies from responding to her requests.
The subpoenas seek information on vacant properties that Fannie and Freddie technically owned after they were foreclosed. The information of particular interest has to do with “criminal activity such as drug dealing and prostitution,” as well as the genera upkeep at the foreclosed properties.
Harris’s filings also allege Fannie and Freddie may have violated securities laws over the housing-related debt they issue. Fannie and Freddie are the largest source of home funding, but they do not make loans, but rather buy repackage them into securities for sale to investors.