With the Federal Housing Finance Agency (FHFA) agreeing to participate in Fannie Mae and Freddie Mac buyback programs as a result of a recent lawsuit, Massachusetts Attorney General Martha Coakley asked the agency on Monday to further expand its policy changes.
Coakley sued the FHFA in June, alleging that Massachusetts families were illegally losing their homes because the agency would not engage in the Fannie Mae and Freddie Mac foreclosure buyback programs.
The FHFA recently agreed to partially participate in the program by allowing the sale of real-estate owned homes to the former homeowners, as well as a person who is representing the former homeowner, with the home sold at a fair market value.
“We are pleased that FHFA now has agreed to reverse in part its position regarding buyback programs that were a major component of our lawsuit,” Coakley said in the letter sent to Mell Watt, FHFA director, on Monday.
Coakley, however, believes the policy should cover a larger inventory of houses as well as short-sell homes. The revised policy only includes houses that are in the current inventory, but not homes that were foreclosed after Nov. 25.
In addition, Coakley wants the FHFA to consider using principal reductions to help consumers avoid foreclosures.
"FHFA should take this opportunity to re-evaluate the effectiveness of its loss mitigation policies and adopt proven strategies, such as principal reduction and targeted buyback programs,” Coakley wrote. “These and other approaches are fully consistent with FHFA’s Congressional mandate.”