Fannie, Freddie Must Obey Mortgage Law, State’s AG Says
Stock Chart for Federal Home Loan Mortgage Corp (FMCC)
The companies must offer “commercially reasonable” changes under legislation signed into law Aug. 3 by Governor Deval Patrick, Coakley’s office said today in a statement.
“We expect Fannie Mae and Freddie Mac, like all creditors, to comply with these statutory obligations,” Coakley said in a letter to the Federal Housing Finance Agency. “We expect that Fannie Mae and Freddie Mac will pursue common-sense loan modifications for borrowers when the economic benefits of a modified loan exceed the significant losses anticipated at foreclosure.”
Under the law, creditors must modify certain loans when the value of the modified loan is greater than the anticipated recovery from a foreclosure. They must also show they are the legal mortgage-holders when foreclosing on homes.
Coakley also urged the FHFA, which regulates Fannie Mae and Freddie Mac, to reduce loan principal balances for struggling homeowners.
A spokeswoman for the FHFA, Stefanie Johnson, declined to comment immediately on the attorney general’s letter.
To contact the reporter on this story: David McLaughlin in New York at firstname.lastname@example.org
Bloomberg reserves the right to edit or remove comments but is under no obligation to do so, or to explain individual moderation decisions.