California DA Subpoenas Freddie and Fannie
Next up – After subpoenaing BofA a month ago, California AG Kamala Harris is exerting pressure on Freddie Mac and Fannie Mae to get insight about their lending and foreclosure practices in the state of California.
Some of the issues the investigators are looking into are:
• Freddie and Fannie’s roles as landlords of about 12,200 foreclosed properties
• Their mortgage-servicing and home re-possession practices
• Their purchases and sponsorship of securities holding “toxic mortgages” in California
Edward Mills, a financial policy analyst with FBR Capital Markets and Company, said “Harris has been the most aggressive state attorney general in trying to assist borrowers who are “underwater” on their mortgages.” Mills also said of Harris, “She’s felt that Ed Demarco has not done enough… and has undue influence over what changes are put in place at Fannie and Freddie.”
Mills also noted that the move to open an investigation is a creative way to potentially force policy changes from the mortgage giants.
Lastly, investigators are trying to uncover the role Freddie and Fannie had with mortgage-backed securities. The AG has been continuously looking into those involved with the secondary market for mortgages that helped lead to the housing bubble. Other companies subpoenaed in relation to this inquiry were Bank of America, Countrywide, and Citibank.
Freddie and Fannie hold about 40 percent, or 4 million, of the home loans in California alone. Every state has Freddie and Fannie mortgages; it’s possible this investigation could encourage other states to investigate the firms’ operations in their own jurisdictions.
As with Bank of America, California is leading the way and other states will hopefully soon follow with investigations into Freddie and Fannie.
Will agents in California benefit from these investigations? Do those in other states have something to look forward to? We’d love to hear your thoughts.
Read the entire story from the Los Angeles Times here.