The American Civil Liberties Union and the Center for Popular Democracy have filed a lawsuit to compel the Federal Housing Finance Agency to provide details about the agency’s relationship with the financial industry and its efforts to block local governments from using eminent domain to prevent foreclosures.

The FHFA, which regulates mortgage giants Fannie Mae and Freddie Mac, has gone on the record opposing the use of eminent domain to seize underwater mortgages and grant principal reductions to borrowers in order to put them above water. The agency has threatened to sue any local or state jurisdiction that takes such an action and/or to cease doing business in that jurisdiction, which would deny residents — many of them people of color — access to loans backed by Fannie or Freddie.

“For years, communities of color across the nation were targeted by banks peddling subprime toxic mortgages, greatly contributing to the current foreclosure crisis,” said Udi Ofer, executive director of the ACLU of New Jersey, in a statement.

“Now communities are responding by considering novel approaches to help save their neighborhoods. Municipalities should be able to consider all of their options.”

Local governments are considering invoking eminent domain in order to help homeowners remain in their homes, bolster neighborhoods and maintain property values for all homeowners, the ACLU said.

“The FHFA has taken an aggressive stance on this issue in a way that has harmed minority communities. The public deserves to know why,” said Linda Lye, staff attorney with the ACLU of Northern California, in a statement.

Source: ACLU

Show Comments Hide Comments

Comments

Sign up for Inman’s Morning Headlines
What you need to know to start your day with all the latest industry developments
Success!
Thank you for subscribing to Morning Headlines.
Back to top
Real estate news and analysis that gives you the inside track. Subscribe to Inman Select for 50% off.SUBSCRIBE NOW×
Log in
If you created your account with Google or Facebook
Don't have an account?
Forgot your password?
No Problem

Simply enter the email address you used to create your account and click "Reset Password". You will receive additional instructions via email.

Forgot your username? If so please contact customer support at (510) 658-9252

Password Reset Confirmation

Password Reset Instructions have been sent to

Subscribe to The Weekender
Get the week's leading headlines delivered straight to your inbox.
Top headlines from around the real estate industry. Breaking news as it happens.
15 stories covering tech, special reports, video and opinion.
Unique features from hacker profiles to portal watch and video interviews.
Unique features from hacker profiles to portal watch and video interviews.
It looks like you’re already a Select Member!
To subscribe to exclusive newsletters, visit your email preferences in the account settings.
Up-to-the-minute news and interviews in your inbox, ticket discounts for Inman events and more
1-Step CheckoutPay with a credit card
By continuing, you agree to Inman’s Terms of Use and Privacy Policy.

You will be charged . Your subscription will automatically renew for on . For more details on our payment terms and how to cancel, click here.

Interested in a group subscription?
Finish setting up your subscription