California attorney general Kamala Harris recently has filed a suit in San Francisco County Superior Court against Fannie Mae and Freddie Mac which will require the two firms to respond to a series of questions to be thrown into them by the state.
This is the latest from Atty. Harris against the mortgage-finance giants and their regulator, the Federal Housing Finance Agency. It is the latest attempt of the attorney to keep the battle over states being able to investigate firms under conservatorship of a federal regulator. According to the lawsuit, FHFA wasn’t within its rights to dismiss inquiries against private companies that operate in the state.
It may be noted that just last month, subpoenas have been issued to the firms to provide extensive answers to questions regarding foreclosed properties they own in California.
The subpoenas are asking for the firms to disclose records of every vacant home owned by the companies in the state. Then the subpoenas immediately dropped the bomb, if any of the two were aware of the drug dealing, prostitution or the presence of explosives and radioactive materials in these homes.
Both firms have been backed by FHFA who have instructed both Fannie and Freddie to disregard the subpoenas. The FHFA said the subpoenas are “frequently vague and ambiguous,” then asked the attorney general to withdraw them.
In its statement, FHFA said that the state appears to be “engaged in an open-ended exploratory investigation” which is derogatory to the authority of FHFA while also becoming a lumber on the operations of the firms. The effort required to collect the “voluminous amount of information” to comply with the subpoenas “would be nothing short of staggering.” The FHFA declined to comment further on the issue.
Indeed, Ms Harris’ efforts are phenomenal, trying to save the state, which is among the hardest hit by the bad economy, from further tumbling down. Aside from the ongoing scrutiny, she also criticized Fannie and Freddie for continuously resisting efforts to modify mortgages by reducing loan balances for borrowers who owe more than their homes are worth, calling FHFA’s Edward DeMarco to step aside if he was unwilling to approve principal write-downs by the firms.
Atty. Harris has been a key figure in the continuous efforts of the Obama Administration in forging a $25 billion settlement with banks over foreclosure abuses.