California Attorney General Sues Fannie, Freddie

Published December 20, 2011

| Reuters

California Attorney General Kamala Harris sued Fannie Mae and Freddie Mac on Tuesday in an effort to further her probe into the mortgage foreclosure practices of the companies.

The lawsuits, filed in California Superior Court in San Francisco, seek to force the companies to turn over documents they earlier refused to provide.

Harris served the housing finance companies with administrative subpoenas on Nov. 15.

Fannie and Freddie's regulator, the Federal Housing Finance Agency, told her office on Dec. 9 that "no state Attorney General had the authority" to issue such a subpoena, according to court papers.

"The conservator's position is incorrect," Harris said in the lawsuit. No law exempts the firms from responding to her requests, she added.

FHFA declined to comment on the filings. Spokespeople for Fannie Mae and Freddie Mac also declined comment.

The subpoenas ask for details about vacant properties that Fannie and Freddie technically own after they were foreclosed.

The subpoenas request information about "criminal activity such as drug dealing and prostitution" and about the general upkeep at the foreclosed properties.

Fannie Mae and Freddie Mac were taken over by the government more than three years ago and have stayed afloat with about $169 billion in taxpayer funds.

In recent months, Harris has stepped up pressure on the government-supported firms, calling for FHFA director Edward DeMarco to step down if he was unwilling to reduce mortgage debt for underwater borrowers.

The firms have resisted that idea and FHFA has forbidden principal writedowns.

After calling for DeMarco's resignation in November, Harris served the firms with subpoenas.