The state filed a lawsuit on Monday against the mortgage giants, accusing them of blocking foreclosure buyback programs which aim to help poor residents stay in their homes, CNBC has reported.
Under foreclosure buyback programs, a non-profit organization buys foreclosed properties, then sells them back to the original owners at a more affordable price. Massachusetts state law prohibits creditors from blocking buyback programs.
The lawsuit alleges Fannie Mae and Freddie Mac have failed to comply with state law because their policies prohibit property sales to non-profits that resell the property to the original homeowner, CNBC said.
"It makes no sense for our federal government to stand in the way of this work to help struggling families stay in their homes, and it is illegal for Fannie and Freddie to do this in Massachusetts," Massachusetts attorney general, Martha Coakley, said in a statement.
Massachusetts has taken Fannie Mae and Freddie Mac to task over the GSEs blocking access to buyback programs.