Massachusetts on Monday filed a lawsuit against mortgage finance giants Fannie Mae and Freddie Mac, accusing them of violating state law by blocking "foreclosure buyback programs" intended to help poor residents keep their homes.
In a foreclosure buyback program, a non-profit organization buys a foreclosed property and then resells it back to the original owner at a more affordable price. Massachusetts passed a law in 2012 prohibiting creditors from blocking such programs.
The lawsuit, filed in Suffolk Superior Court on Monday, alleges Fannie Mae and Freddie Mac have failed to comply with the law because they have policies that prohibit property sales to non-profits that resell to the original homeowner.