Securing Judicial Review Under the Administrative Procedure Act of Denials of Modifications of Mortgages Held by Fannie Mac and Freddie Mac

Abstract

In 2009, the Obama Administration created a program intended to prevent home mortgage foreclosures by allowing modifications of the mortgages. The program was HAMP – Home Affordable Modification Program. HAMP has been a notorious failure, with a July 2015 report stating that only 30% of homeowners who applied for modifications were successful. Although servicer misconduct in administration of HAMP has been rampant, courts generally have not allowed homeowners to secure judicial review of denials of mortgage modifications. This article advances an argument that has not been made in litigation or commentary: that at least for mortgages held or guaranteed by Fannie Mae or Freddie Mac (which comprise more than half the mortgages in the U.S.), judicial review of modification denials is available under the Administrative Procedure Act (APA). This is the case because before HAMP was created, Fannie and Freddie had been put into conservatorship by the Federal Housing Finance Agency, which unquestionably is subject to the APA and is in total control of every aspect of the activities of Fannie and Freddie. Thus, the denials are final agency action subject to judicial review.