A federal lawsuit in which Fannie Mae is accused of failing to maintain and market homes located in communities of color has settled.
Fair Housing Advocates of Northern California (FHANC) along with the National Fair Housing Alliance (NFHA) and 19 other fair housing organizations nationwide reached a landmark $53 million agreement. Of the $53 million, $13.5 million will go to attorneys' fees and costs, according to Frances Espinoza, North Texas Fair Housing Center executive director.
“It's going to bring badly needed dollars to these communities that have been harmed because of the this failure to maintain and market foreclosed properties and it's going to bring badly needed dollars to those communities and to revitalize these neighborhoods," said Caroline Peattie, executive director of Fair Housing Advocates of Northern California. "That's part of a good chunk of what the settlement is about.”
The areas of Northern California that are expected to benefit from the payout are Vallejo Fairfield, Oakland and Richmond.
“We will be able to invest something like $755,000 in those areas and those are similar amounts that are being invested in the various Metro areas across across the country," Peattie told the Southern California Record. “The settlement money could be used for anything like foreclosure prevention services, prepurchase education, making homes more accessible, helping first time home buyers, and down payment assistance. It's depends on the different communities.”
Southern California fair housing groups were not litigants in the class action lawsuit.
“The investigation took a significant amount of time, effort and diversion of resources and so for an agency to commit to is a huge undertaking,” Peattie added. “My colleagues in Southern California had their hands full with all kinds of issues. The fact that they weren't involved in this investigation simply means they were just stretched to the max being involved in various other federal housing endeavors.”
The investigation, detailed in the 2016 complaint, found that in more than 2,300 properties in 38 metropolitan areas, Fannie Mae’s REO properties in predominantly white neighborhoods were far more likely to have a small number of exterior maintenance deficiencies compared to in communities of color where REO properties were likely to have large numbers of such deficiencies.
Specifically, in predominantly white neighborhoods, the average number of deficiencies was 4.8 compared to 7.2 in communities of color.
The Feb. 7 settlement agreement states:
"Defendant shall pay or cause to be paid to Plaintiffs the total aggregate lump sum of $53,000,000 in full and final settlement of the Litigation, including but not limited to, any claims for damages of any kind whatsoever, attorneys’ fees, and costs (the “Settlement Amount”). Plaintiffs will use $35,390,000 of the Settlement Amount to address community needs, as determined by Plaintiffs, including addressing home ownership, neighborhood and/or community stabilization, access to credit, property rehabilitation, residential development in African American and Latino communities, fair housing education and outreach, counseling, and other fair housing activities."