Can you edit factions?

It certainly is possible.

For the default races:

Go to your Steam folder, then find: Steam\steamapps\common\FE Legendary Heroes\data\English If you don't have Steam, then go to your Stardocks folder, I guess.

-Sovereigns are found in the CoreUnits.xml (search for Sovereign_[Name])

-Faction info is in CoreRaceTypes (starting units) and CoreRaceConfig (city names, colors, faction traits, alliance,...)

-Bloodtypes are located in CoreAbilities.xml

For custom races: 

Go to My Documents\My Games\LegendaryHeroes

- Sovs are in the Unit folder: each unit you created is a separate xml file in there. Just find the one with the same name as the sov.

- Faction info is in the Race or RaceType folder (not sure)

All xml files can be edited with Notepad.

Note that if you modify the core files as described above, they can be updated/overwritten by patches or other Steam operations, so you'll probably want to back them up (and you might want to back up the originals too, in case you inadvertently screw something up, though you can just tell Steam to re-download it if it's really bad.)

sorry for not finding this post before asking the same question again.  can delete my other post.

Yes you can but you need to edit the XMLs that are in your Documents/My Games/%Elemental Game% folder