The Federal Housing Finance Agency is ready, willing and able to use its big stick as regulator of the GSEs to play hardball against municipalities that move forward with proposed efforts to seize underwater mortgages via local government eminent domain powers, say industry observers. One year ago nearly to the day after the FHFA warned “action might be necessary” to protect the GSEs, the Finance Agency released a legal memorandum outlining a number of steps it could take in response to an eminent domain action to restructure mortgages. The FHFA reiterated its “significant concerns” as conservator of Fannie Mae and Freddie Mac, as well as regulator of the 12 Federal Home Loan Banks, that widespread seizures of the loans and their subsequent refinancing “presents a clear threat to the safety and sound operations of the GSEs.”