California Attorney General Sues Fannie Mae, Freddie Mac

California Attorney General Kamala Harris on Tuesday sued Fannie Mae and Freddie Mac after the mortgage companies' regulator, the Federal Housing Finance Agency (FHFA), tried to block subpoenas seeking mortgage information.

In November, Harris' office subpoenaed the firms regarding mortgages and foreclosed properties owned by the entities in California. It sought a record of every vacant home owned by Fannie and Freddie and asked if they were aware of drug dealing, prostitution, explosives or radioactive materials, according to the Wall Street Journal, which first reported the Tuesday's suit.

The FHFA, which oversees Fannie and Freddie after a 2008 government takeover, called the subpoenas frequently vague and ambiguous and said they would place excessive burdens on the firms.

In the lawsuit, filed in San Francisco County Superior Court, Harris said the FHFA doesn't have the authority to dismiss the subpoenas against a private company, and also said that state agencies could have lost money from securities issued by Fannie and Freddie.

The suit raises questions about whether the state has the authority to subpoena Fannie and Freddie while they're under federal conservatorship.

Harris has previously criticized the agencies for not modifying mortgage loans to assist underwater homeowners, as well as calling a mortgage settlement between all 50 states and the major banks inadequate for homeowners.

The California suit echoes a battle between the FHFA and the city of Chicago over vacant properties. Last week, the FHFA sued Chicago over an ordinance that required vacant properties to be registered and maintanced, arguing that the law violated the FHFA's immunity to outside regulations and taxation.

An attorney for the city of Chicago responded that the law was in the best interests of both local neighborhoods and Fannie and Freddie would benefit from maintaining the homes' values.

The Securities and Exchange Commission (SEC) also sued on Friday six former Fannie and Freddie executives over what it alleges were misrepresentations regarding the firms' exposure to subprime mortgages losses. Fannie and Freddie have agreed to cooperate with the lawsuit and are not named as defendents.