Massachusetts Attorney General Martha Coakley has filed suit against Fannie Mae, Freddie Mac and their regulator, the Federal Housing Finance Agency, for allegedly failing to comply with a 2012 state law designed to prevent displacement due to foreclosure.

Fannie and Freddie require nonprofits that buy foreclosed homes and resell them to their former owners to pay the full amount of the mortgages or the properties’ fair market value, whichever is higher, but state law allows such nonprofits to buy foreclosed homes at the lesser price, Bloomberg reported.

In the complaint, the state noted that the mortgage giants’ policies interfere with efforts by groups such as Boston Community Capital, which has prevented 475 Massachusetts families from being displaced since it was started in 2009, the news outlet said.


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