Last week, Massachusetts U.S. District Judge Richard Stearns ruled against the Commonwealth of Massachusetts in its lawsuit against Fannie Mae and Freddie Mac. Earlier this year, Massachusetts brought this lawsuit against Fannie Mae and Freddie Mac to enforce a new law that prohibited lenders from refusing to work with nonprofits who help former homeowners buy back foreclosed properties.
I haven’t had an opportunity to review all of the legal arguments in this case, but as a policy matter, Fannie Mae and Freddie Mac’s refusal to follow this state law is shortsighted. These buy back programs ensure that Fannie Mae and Freddie Mac get fair market value of foreclosed properties while allowing former homeowners to remain in their homes. It is a good deal for all involved parties and as government-sponsored enterprises, Fannie Mae and Freddie Mac should be doing much more to help homeowners in need.