The National Fair Housing Alliance and 19 local housing groups around the country, including the Fair Housing Center in Cleveland, yesterday announced a $53 million settlement with Fannie Mae over allegations the agency discriminated against communities of color in the aftermath of the 2008 mortgage crisis.
A comprehensive four-year study of 2,900 Fannie Mae-owned foreclosures in 39 metropolitan areas showed, through 49,000 photographs, how homes in Black and Latino communities were left to deteriorate while homes in white areas were upkept. In the lawsuit that preceded the settlement, the groups argued that "Fannie Mae stigmatizes communities of color as less desirable than predominantly white neighborhoods."
“Cleveland was at the epicenter of the foreclosure crisis in the United States, a crisis that was exacerbated by the failure to maintain and market REO properties in communities of color in a nondiscriminatory manner. Fannie Mae’s settlement will provide much-needed relief to some of the hardest hit neighborhoods within our community,” said Carrie Pleasants, executive director of the Fair Housing Center.
The study included 50 properties in Cleveland, of which the study found:
- 93.3% of Fannie Mae properties in communities of color had 5 or more maintenance deficiencies or problems, while only 58.6% of the Fannie Mae properties in predominantly white neighborhoods had 5 or more maintence deficiencies or problems
- 40% of the Fannie Mae properties in communities of color had 10 or more issues while only 6.9% of Fannie Mae properties in predominantly white neighborhoods had that many
- 80% of the Fannie Mae properties in communities of color had damaged siding, while only 34.5% of those in predominantly white neighborhoods had damaged siding
- 33.3% of Fannie Mae properties in communities of color had holes in the structure, while only 17.2% of those in predominantly white neighborhoods did
- 53.3% of properties in communities of color had damaged roofs versus 13.8% of those in white neighborhoods
- 46.7% of those in communities of color had trash on the property while only 3.4% of those in white neighborhoods did
“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 National Fair Housing Alliance. “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.”
$35 million from the settlement will go to the 39 local agencies in the lawsuit, the exact split of which isn't yet known, for "grants, down-payment assistance for first-generation homebuyers and renovations for homes that languished in foreclosure."