September 18, 2012
In response to threats from local governments to use eminent domain to acquire mortgage loans, the Federal Housing Finance Agency (FHFA) announced that it may take action to avoid a risk to safe and sound operations and to potential taxpayer losses. The FHFA is the regulator and conservator of Fannie Mae and Freddie Mac and the regulator of the Federal Home Loan Banks (FHLBs).
According to the FHFA, the use of eminent domain could cause Fannie Mae and Freddie Mac losses and chill the extension of credit to home buyers. Because of the concern over this issue, the FHFA published a notice in the Federal Register seeking comments on various questions raised by the use of eminent domain.