National Fair Housing Alliance Reaches Settlement With Fannie Mae On Rebuilding Communities Of Color

The National Fair Housing Alliance (NFHA) and 20 fair housing organizations throughout the country reached a landmark $53 million agreement with the Federal National Mortgage Association, commonly known as Fannie Mae.

The settlement resolves the groups’ claims that Fannie Mae treated homes it owned in majority-Black and Latino communities unfavorably. The settlement will help rebuild and strengthen communities of color in 39 metropolitan areas.

In the case, the plaintiffs alleged that Fannie Mae maintained and marketed its foreclosed homes in predominantly white neighborhoods while allowing homes in predominantly Black and Latino neighborhoods to fall into disrepair and that this differential treatment exacerbated the damage caused by the 2008 mortgage crisis and impeded recovery from the crisis in neighborhoods of color. The case was the first time a federal court confirmed the nation’s fair housing laws cover the maintenance and marketing of real estate owned (REO) properties.

“Black and Latino consumers were actively targeted by predatory subprime mortgage lenders in the run-up to the 2008 financial crisis and, as a result, homes in Black and Latino neighborhoods were respectively 2 and 2.5 times more likely to be foreclosed than homes in white communities.

“Millions of homeowners in Black and Latino communities lost their homes, and these neighborhoods were decimated,” said Lisa Rice, president and CEO of NFHA. “Today’s settlement brings hope to underserved neighborhoods, and the people living in them, in 39 metropolitan areas throughout the nation. Equally heartening is that, as a result of our efforts, Fannie Mae has implemented practices that we believe represent the gold standard for maintaining and marketing foreclosed homes equitably.”

The plaintiffs’ 2016 allegations against Fannie Mae arose after a comprehensive, four-year investigation of more than 2,300 Fannie Mae-owned foreclosed properties in 39 metropolitan areas in the country. The plaintiffs collected more than 49,000 photographs revealing poorly maintained properties in Black and Latino communities, particularly as compared to properties in predominantly white neighborhoods.

Today’s agreement has far-reaching implications. The plaintiffs will invest the vast majority of the settlement monies directly back into the communities that were harmed by Fannie Mae’s alleged discriminatory conduct. The relief will fulfill a central purpose of the Fair Housing Act: ensuring equitable treatment of neighborhoods regardless of their racial makeup. With similar cases pending against private lenders like Bank of America and Deutsche Bank, this recognition has significant meaning.

NFHA and the plaintiff fair housing organizations will use over $35 million of the settlement to promote homeownership, neighborhood stabilization, access to credit, property rehabilitation and residential development in the 39 metropolitan areas at issue in the case. The plaintiffs will manage and disburse the settlement funds, providing much-needed grants, including down-payment assistance for first-generation home buyers and renovations for homes that languished in foreclosure. The grants will also include innovative programs and partnerships to promote fair housing.

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