Fannie Mae, the largest of two mortgage financing giants supported by taxpayer dollars since 2008, is being accused of racial discrimination in how it handles foreclosed homes, according to a complaint filed with the U.S Department of Housing and Urban Development by civil rights groups.
In the complaint, the National Fair Housing Alliance and 19 local partner organizations allege that Fannie Mae maintains and markets its foreclosed properties in white neighborhoods “consistently better” than in middle- and working-class African American and Latino neighborhoods. This practice violates the federal Fair Housing Act, the groups allege after conducting a five-year investigation.
“Fannie Mae is wreaking havoc on middle- and working-class communities of color nationwide through a pattern of neglect that is frankly appalling,” Shanna L. Smith, president and chief executive of the National Fair Housing Alliance, said in a statement.
Fannie Mae issued a statement strongly denying the allegations.
“We strongly disagree with these allegations and firmly believe they have no merit,” Fannie Mae said. “We are confident that our standards ensure that properties in all neighborhoods are treated equally, and we perform rigorous quality control to make sure that is the case. We remain dedicated to neighborhood stabilization efforts across the nation, including with respect to our maintenance of foreclosed properties.”
Maintenance, Marketing Deficiencies Alleged
Overall, the fair housing organizations investigated the maintenance and marketing of foreclosures for 39 different types of deficiencies that affect a home’s value, including: broken, boarded or damaged windows and doors; unlocked doors and windows; damaged and obstructed gutters and downspouts; safety hazards; accumulated trash; overgrown lawns and shrubs; lack of “for sale” signs; and other issues.
The NFHA and its partners have investigated 2,106 REO properties owned by Fannie Mae in 34 metropolitan areas, encompassing 129 cities across the United States.
Since 2009, the NFHA says it has made efforts to work with the Government Sponsored Enterprises (“GSEs”), Fannie Mae and Freddie Mac, to correct their practices.
Smith said that Freddie Mac has taken responsibility. “Freddie Mac looked into its practices and made good faith efforts to correct its business model, but Fannie Mae refused to take responsibility for its neglect in communities of color,” she said.
The difference between Freddie and Fannie properties is striking, the NFHA says.
“Fannie Mae has not only ignored the problem but has continued to award millions of dollars in new contracts to the same asset management companies that engaged in this discriminatory behavior. We have filed this complaint after having exhausted every possible means we could think of to get Fannie Mae to abide by the law and work with us to re-stabilize the damaged communities.”
Read more about the NFHA’s complaint here.