Massachusetts Attorney General Martha Coakley is suing federal mortgage giants Fannie Mae and Freddie Mac.
In the lawsuit, Coakley says Fannie and Freddy are breaking a state law by refusing to sell homes to charities which buy foreclosed properties and sell them back to the original owners.
Elyse Cherry is the CEO of Boston Community Capital. She says her organization has helped about 500 families stay in their homes, but Fannie Mae and Freddy Mac refuse to work with them.
"We have lots of folks backed up with loans that fannie or Freddie own who are in their homes still, that can afford a current market rate mortgage that we can provide, and we can’t serve them."
Cherry says Fannie Mae and Freddy Mac won’t sell foreclosed homes back to their former owners or to nonprofits that intend to sell back to the former owners - unless they receive the full value of the mortgage – which can be far more than the value of the home. But they’ll charge market prices to any other buyer.
Fannie and Freddy did not return calls for comment.
In a statement, Coakley said "It makes no sense for our federal government to stand in the way of helping struggling families stay in their homes
