1st Circ. Says Fannie, Freddie Can Foreclose Out Of Court

Law360 (June 9, 2021, 12:21 PM EDT) -- Fannie Mae and Freddie Mac can continue out-of-court foreclosures in states that allow them, the First Circuit said Tuesday in an opinion concluding that the mortgage giants are not governmental actors despite being controlled by the Federal Housing Finance Authority.

The three-judge panel's opinion, penned by U.S. Circuit Judge Sandra L. Lynch, rejected arguments by Rhode Island borrowers that Fannie Mae and Freddie Mac are an arm of the government and owe them due process rights.

Instead, in its role as conservator, the FHFA "stepped into the shoes" of the private, government-sponsored enterprises and assumed all of their contractual rights, the...

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