California Sues Freddie & Fannie for Info

     SAN FRANCISCO (CN) – California’s attorney general says Fannie Mae and Freddie Mac refused to provide information to the state’s Mortgage Fraud Strike Force, which is investigating the mortgage and foreclosure crisis in California, which has cost more than 768,000 families their homes.
     Attorney General Kamala Harris filed separate petitions to enforce investigative interrogatories against Fannie Mae (the Federal National Mortgage Association) and Freddie Mac (the Federal Home Loan Mortgage Corporation.)
     “The mortgage and foreclosure crisis has had a devastating impact on the people of
     California,” Harris says in her complaint against Freddie Mac. “From January, 2007, through June, 2011, 768,330 residential mortgages have been foreclosed upon in California. Foreclosures not only affect the families who lose their homes, but also the safety, health and welfare of the entire community.
     “Foreclosed homes create numerous problems in California. For example, abandoned properties often become venues for a wide range of criminal activity, including prostitution and drug trafficking.
     “Foreclosed homes also create health and safety issues such as fires caused by overgrown yards or neglected gas and electrical connections (often damaged by metal thieves). Such fires are particularly hazardous in high-density urban areas where fires can spread quickly to nearby buildings, and in communities that are vulnerable to wildfires. Vacant properties also create opportunities for infestation by rats and vermin and can become dumping grounds for construction debris and garbage.
     “Studies by Fannie Mae and others demonstrate that the very presence of vacant homes in a neighborhood significantly affects the value of the remaining properties, reducing the value of other homes on the block by thousands of dollars each.
     “Improper foreclosure practices can violate the rights of Californians, including those who serve in the armed forces, or who are members of racial, ethnic or religious minorities.
     “In addition to owning thousands of foreclosed homes in California, Freddie Mac issued numerous securities marketed and underwritten by a wide range of parties – and purchased by Californians. Many of those securities are now virtually worthless, and there have been serious accusations of fraud in connection with them. Most recently, the Securities and Exchange Commission (SEC) charged former Freddie Mac senior executives with securities fraud and entered into a non-prosecution agreement with Freddie Mac pursuant to which Freddie Mac does not contest a Statement of Facts about its deceptive and misleading public statements.
     “In light of its central role in the mortgage and foreclosure crisis, Freddie Mac has extensive information that is critical to the Attorney General’s investigation. The Attorney General therefore issued the Investigative Interrogatories to Freddie Mac. The Investigative Interrogatories ask questions that are critical to protecting the health, safety and welfare of California residents and enforcing California law of general applicability. Specifically, the Attorney General seeks information concerning:
     “Criminal activity such as drug dealing and prostitution at foreclosed homes owned by Freddie Mac;
     “Compliance of Freddie Mac’s loan servicers and property managers with civil rights laws and laws protecting members of our armed forces against unlawful eviction or
     foreclosure;
     “Compliance with California securities laws;
     “Compliance with California tax laws; and
     “The presence of toxic materials, explosives, weapons or ammunition, overgrown brush or other fire hazards, mosquito-filled pools, or other threats to health and safety at Freddie Mac’s foreclosed properties in California.
     “Despite the fact that the Attorney General has authority to issue the Investigative Interrogatories, Freddie Mac has failed and refused to provide any of the information requested by the Attorney General. The People therefore request an order compelling Freddie Mac to answer the Investigative Interrogatories.”
     Both complaints were filed in Superior Court.

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