Report: Harris files suits against Fannie Mae, Freddie Mac

Jessica M. Karmasek Dec. 21, 2011, 9:42am


SAN FRANCISCO (Legal Newsline) - California Attorney General Kamala Harris on Tuesday filed two lawsuits against Fannie Mae and Freddie Mac.

The suits, filed in San Francisco County Superior Court, seek to force the companies, now under a federal conservatorship, to answer questions from Harris' office about the mortgage crisis.

In November, Harris subpoenaed both Fannie Mae and Freddie Mac as part of her own state investigation into mortgage foreclosure practices.

The attorney general wanted more information on the two companies' procedures involving mortgage servicing and home repossession.

She also wanted details on Fannie Mae and Freddie Mac's buying of securities holding so-called "toxic mortgages" in the state.

So far, Harris' subpoenas have been ignored, the Los Angeles Times reported.

According to the Times, the attorney general's suits seek an order to require the two companies to answer her office's set of 51 questions.

Harris claims Fannie Mae and Freddie Mac won't answer her office's questions because the Federal Housing Finance Agency -- the agency that oversees the two companies following the 2008 financial crisis -- says federal law preempts the State from issuing subpoenas to them.

This is just the latest in the attorney general's attempts to put pressure on the companies.

In November, Harris told Edward DeMarco, the acting director of the FHFA, to "step aside" if he wouldn't help homeowners.

Harris said DeMarco continues to refuse to lower mortgage loans for troubled homeowners.

"It has become clear to me that the only way to keep distressed California homeowners in their homes is through meaningful principal reduction," the attorney general said in a statement at the time.

Fannie Mae and Freddie Mac -- despite owning an ample chunk of the mortgage debt in the country -- are not part of the ongoing settlement talks with Wells Fargo & Co., JPMorgan Chase & Co., Citigroup Inc., Ally Financial Inc. and Bank of America.

In September, Harris backed out of the talks with the nation's top mortgage servicers.

In a letter to Associate U.S. Attorney General Thomas Perrelli and Iowa Attorney General Tom Miller, who is heading up the talks, she called the rumored $20 billion deal "inadequate" for homeowners, saying it provided to much protection for financial institutions.

"After much consideration, I have concluded that this is not the deal California homeowners have been waiting for," the attorney general wrote.

"(The) relief contemplated would allow too few California homeowners to stay in their homes."

The probe began last October with inquiries into so-called "robosigning" practices by several mortgage companies, and has since broadened into identifying and addressing additional alleged improper foreclosure practices.

Since leaving the nationwide talks in September, Harris has started her own comprehensive investigation into the industry.

Earlier this month, Harris announced she and Nevada Attorney General Catherine Cortez Masto were teaming up to investigate misconduct and fraud in the mortgage industry.

From Legal Newsline: Reach Jessica Karmasek by email at

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