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May 28, 1993


The opinion of the court was delivered by: LEONARD D. WEXLER

 WEXLER, District Judge

 Liberty Mortgage Corp. ("Liberty" or "plaintiff"), brought suit against the Federal Home Loan Mortgage Corp. ("Freddie Mac" or "defendant") alleging that Freddie Mac violated its due process rights under the Fifth Amendment of the Constitution when it terminated Liberty's service agreement. Plaintiff also brought suit against Freddie Mac under 28 U.S.C. § 1983 and the New York state constitution alleging that Freddie Mac violated Liberty's due process rights when it seized Liberty's servicing portfolio pursuant to state sanctioned U.C.C. procedures. Presently before the Court is Freddie Mac's motion for partial summary judgment with respect to both the federal and state due process claims. Freddie Mac claims that summary judgment must be granted in its favor because it is neither a federal or state actor. Because this Court agrees with defendant and finds that Freddie Mac is neither a federal actor nor a state actor, summary judgment is granted in favor of defendant.


 On or about July 16, 1985, Liberty entered into an agreement with Freddie Mac to become one of its sellers/servicers. As a seller/servicer, Liberty entered into Master Commitments to sell mortgages secured by residential real property to Freddie Mac and to "service" those mortgages on behalf of Freddie Mac; that is, to collect and remit monthly payments of principal, interest and escrow (for taxes and insurance). In return for servicing the mortgages, Liberty received a yearly fee that typically ran between 1/4% to 7/8% of a loan's value. Plaintiff alleges that Freddie Mac violated its due process rights when Freddie Mac terminated plaintiff as a seller/servicer and seized its servicing portfolio without any factual findings with respect to plaintiff's servicing procedures. Freddie Mac contends that it terminated Liberty after an investigation and audit revealed significant irregularities, quality control problems and fraud in connection with the sale and servicing of the Freddie Mac loan portfolio.

 The narrow issue presented for review in this case is whether Freddie Mac is a federal or state governmental actor for the purposes of triggering due process protections. Freddie Mac is a government-sponsored enterprise *fn1" ("GSE") whose statutory mission is to provide ongoing assistance to the secondary market for home mortgages, including mortgages securing housing for low and moderate income families. 12 U.S.C. §§ 1451-1455.

 Freddie Mac was initially chartered by Congress to facilitate the expansion and improve the geographic distribution of credit for residential mortgages. Federal Home Loan Mortgage Act, Pub. L. No. 91-351 Title III, s. 302, 84 Stat. 451 (1970) (codified as 12 U.S.C. §§ 1451-59). At the time of its initial charter, Freddie Mac was entitled to the priorities and immunities of the United States, including tax exempt status. However, in 1989, Congress amended Freddie Mac's enacting statute and significantly altered both its corporate structure and its relationship with the United States. *fn2" Financial Institutions Reform, Recovery and Enforcement Act of 1989, Pub. L. No. 101-73, s. 731, 103 Stat. 430 (codified at 12 U.S.C. §§ 1451-59) (hereinafter referred to as FIRREA). All of the actions complained of by plaintiffs took place well after enactment of the 1989 amendments by FIRREA. *fn3"

 The legislative history of FIRREA suggests that the purpose of the 1989 amendments was to privatize the management and operations of Freddie Mac. *fn4" Indeed, Freddie Mac is now owned by private shareholders. *fn5" Prior to FIRREA, the Freddie Mac Board of Directors consisted exclusively of three members of the Federal Home Loan Bank Board, appointed by the President and confirmed by the Senate. Following FIRREA, the Board of Directors consists of 18 members, 13 of whom are elected annually by the private shareholders. A minority of 5 Board members are appointed by the President. None are government officials. 12 U.S.C. § 1452(a)(2)(A).

 In addition, FIRREA replaced direct government control over Freddie Mac's operations with limited regulatory oversight by the Department of Treasury and the Department of Housing and Urban Development. *fn6" The legislative history makes clear that this regulatory authority is not to constitute detailed, day-to-day supervision of Freddie Mac's business decisions. See H.R. Rep. No. 54(III), 101st Cong., 1st Sess., reprinted in 1989 U.S. Code Cong. & Admin. News 385.


 A. Freddie Mac's Termination of Liberty Was Not Federal Action

 The threshold consideration for invoking federal constitutional protection is that federal governmental action is involved. Purely private action does not trigger any constitutional protections. San Francisco Arts & Athletics Inc. v. United States Olympic Comm., 483 U.S. 522, 542, 97 L. Ed. 2d 427, 107 S. Ct. 2971 (1987). Since 1989, Freddie Mac has the attributes of a private corporation, not a government agency. The mere fact that Congress issued its corporate charter does not negate the fact that Freddie Mac is an essentially private entity. See id. 483 U.S. at 543-44 ("The fact that Congress granted [the United States Olympic Committee] a corporate charter does not render the USOC a government agent. All corporations act under charters granted by a government, usually by a state. They do not thereby lose their essentially private nature."); Delaigle v. Federal Land Bank of Columbia, 568 F. Supp. 1432, 1439 (S.D. Ga. 1983) (fact that Congress chartered land bank insufficient to make it a government agency).

 Moreover, the fact that Freddie Mac is extensively regulated by the federal government also does not transform it into a government actor. To attribute Freddie Mac's decision to terminate Liberty to the federal government, this Court would have to find either that "there is a sufficiently close nexus between the [government] and the challenged action of the regulated entity so that the action of the latter may be fairly treated as that of the [government] itself," Jackson v. Metropolitan Edison Co., 419 U.S. 345, 351, 42 L. Ed. 2d 477, 95 S. Ct. 449 (1974) (citing Moose Lodge No. 107 v. Irvis, 407 U.S. 163, 176, 92 S. Ct. 1965, 32 L. Ed. 2d 627 (1972)), or that the government "so far insinuated itself into a position of interdependence with [Freddie Mac] that it was a joint participant in the enterprise." Jackson, 419 U.S. at 357-58 (citing Burton v. Wilmington Parking Auth., 365 U.S. 715, 725, 6 L. Ed. 2d 45, 81 S. Ct. 856 (1961)).

 In Myron v. Consolidated Rail Corp., 752 F.2d 50, 55 (2d Cir. 1985), the Second Circuit found that Conrail, was not a federal actor. Conrail, like Freddie Mac, is chartered by Congress. It relies heavily on federal funds and the federal government not only regulates it, but also monitors its financial performance. Additionally, the federal government owns 85% of Conrail's preferred stock and six of the thirteen people who sit on its board of directors represent the federal government. Finally, in 1981, ...

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