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- Title
ARE FANNIE MAE AND FREDDIE MAC STATE ACTORS? STATE ACTION, DUE PROCESS, AND NONJUDICIAL FORECLOSURE.
- Authors
EYE, WILLIAM E.
- Abstract
This Comment considers whether the federal conservatorship of Fannie Mae and Freddie Mac transformed these entities into state actors subject to constitutional constraints. In particular, it analyzes whether Fannie Mae and Freddie Mac must provide homeowners with due process-namely notice and an opportunity to be heard-when they initiate nonjudicial foreclosures. This Comment surveys and applies five state action tests set forth by the Supreme Court to determine whether nonjudicial foreclosures initiated by Fannie Mae and Freddie Mac must satisfy due process requirements. Application of the state action tests from Lebron and Brentwood Academy most persuasively suggest that nonjudicial foreclosures initiated by Fannie Mae and Freddie Mac must satisfy due process requirements. Although a number of federal district courts and one circuit court of appeals hold that the test embodied by Lebron requires permanent government control to render the entity a state actor, this Comment argues that indefinite control-exhibited by the federal conservatorship-suffices. Alternatively, this Comment argues that pervasive federal entwinement with Fannie Mae and Freddie Mac renders their conduct state action under the test set forth in Brentwood Academy, notwithstanding satisfaction of the Lebron test. To the author's knowledge, no case or academic work has explicitly applied the entwinement test to post-conservatorship Fannie Mae and Freddie Mac. This Comment concludes that Fannie Mae and Freddie Mac are state actors under the entwinement test. However, because courts are reluctant to find state action where the government regulates the secondary mortgage market, it remains unlikely that Fannie Mae and Freddie Mac will be required to provide notice and an opportunity to be heard to homeowners facing nonjudicial foreclosure.
- Subjects
UNITED States; FANNIE Mae; FREDDIE Mac (Company); STATE action (Civil rights); FORECLOSURE; LEGAL status of homeowners; LEBRON v. National Railroad Passenger Corp. (Supreme Court case); DUE process of law; BRENTWOOD Academy v. Tennessee Secondary School Athletic Association (Supreme Court case); ACTIONS &; defenses (Law)
- Publication
Emory Law Journal, 2015, Vol 65, Issue 1, p107
- ISSN
0094-4076
- Publication type
Article