Kamala Harris is a force to be reckoned with in the fight against the mortgage industry.
The California attorney general has filed a lawsuit against Fannie Mae and Freddie Mac over mortgage and foreclosure problems in her state.
The suit comes after Fannie and Freddie's regulator, the Federal Housing Finance Agency, blocked Harris's inquiry into the mortgages and foreclosed properties the government sponsored entities own in California.
In her suits, Harris says that Fannie and Freddie hold extensive information that is critical to her investigation. She notes that between 2007 and June 2011 over 768,000 homes have been foreclosed in California and says those foreclosed homes cause numerous problems in her state including criminal activity like prostitution and drug trafficking.
Fannie and Freddie play and central role in the mortgage and forecloure issues in California, she says in her suit. As a result, Harris requested answers to questsions she says are critical to protecting the health, safety and welfare of the state's residents.
But instead of complying, Harris says in her complaint, Fannie and Freddie have failed and refused to provide any information her office requested.
Last month, the office issued subpoenas asking the firms to provide extensive answers to a range of questions about the mortgages they purchased and the foreclosed properties they own in California.
The FHFA earlier this month said it had directed Fannie and Freddie not to comply with the subpoenas, calling them "frequently vague and ambiguous," and asked the attorney general to withdraw them, according to a letter included in Tuesday's legal filings.
Among other things, the subpoenas asked for a record of every vacant home owned by the companies in the state and asked the firms whether they were aware of drug dealing, prostitution or the presence of explosives and radioactive material in those homes.
The FHFA said the state appeared to be "engaged in an open-ended exploratory investigation" that would undermine the FHFA's authority while placing an extra burden on the operations of the firms. The effort required to collect the "voluminous amount of information" required to comply "would be nothing short of staggering," the FHFA said in its letter.
In September Harris pulled her state of out a nationwide foreclosure probe of some of the nation’s biggest banks over their shady foreclosure practices. That investigation was assembled by the country’s attorneys generals nearly a year ago to look into fraudulent foreclosure practices by banks. Harris backed out of the settlement because “the the nation’s five largest mortgage servicers were not offering California homeowners relief commensurate to what people in the state had suffered.”
California’s break from the 50-state investigation is bad news for big banks under investigation include Bank of America, JPMorgan Chase, Citigroup, Ally Financial and Wells Fargo. California is among states with the most foreclosures issues, and its backing out of the probe means banks won’t be able to rid themselves of the foreclosure problems in one shot. At the end of the 3rd quarter of 2011, 4.43% of all US loans were in the foreclosure process. Of all US loans in the foreclosure process at the end of the 3rd quarter of 2011, 10.8% were in California See below for the lawsuits filed in San Francisco County Superior Court this morning against Freddie Mac and Fannie Mae:
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