Fannie, Freddie to let owners buy back homes

Fannie Mae and Freddie Mac will let borrowers who have gone through foreclosure buy back their homes at market prices under a policy shift announced by the regulator for the two U.S.-owned companies, Bloomberg News reported.
The change outlined by the Federal Housing Finance Agency in a statement today essentially gives some people who owe more than their homes are worth a way to cut mortgage debt. The step follows criticism from consumer groups and Democratic lawmakers who have called for broader principal reduction for homeowners.
“This is a targeted, but important policy change that should help reduce property vacancies and stabilize home values and neighborhoods,” FHFA Director Melvin L. Watt said in the agency’s statement.
FHFA previously required borrowers who went through foreclosure to pay the outstanding mortgage balance before they could retake possession of homes owned by Fannie Mae and Freddie Mac, even though anyone else could pay the current market price.
The ban extended to nonprofit groups that bought homes and attempted to transfer them to prior owners. Massachusetts Attorney General Martha Coakley sued unsuccessfully in federal court to challenge the practice, saying it violated a state law allowing nonprofits to sell properties at fair-market value.
The case, which was dismissed last month, cited the work of Boston Community Capital, a group whose chief executive officer, Elyse Cherry, raised funds for Coakley’s unsuccessful bid for governor this year.