WASHINGTON—Fannie Mae has agreed to reform the procedures it uses for maintaining foreclosed homes it acquires in communities with large Black and Hispanic populations as part of a settlement in a six-year old lawsuit that also includes a more than $50 million settlement.
The lawsuit had been filed by a group of fair-housing organizations that had accused Fannie of providing better upkeep to foreclosed homes in predominately white neighborhoods. The plaintiffs included the National Fair Housing Alliance and other groups who had alleged Fannie allowed homes it owned in 39 metropolitan areas with large Black and Hispanic populations fall into disrepair.
The lawsuit came out of a four-year investigation by the housing groups into the differing treatment Fannie gave to homes it had taken possession of after the 2007-8 financial crisis. Fannie Mae took control of hundreds of thousands of foreclosed homes across the country after the housing market collapsed, noted the New York Times.
$53 Million to be Paid
The settlement also calls for Fannie to pay $53 million in damages to the fair housing organizations, which said the money would be used in affected communities to renovate properties and provide first-time buyers with down payment assistance so they can secure mortgages.
“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,” Lisa Rice, president of the National Fair Housing Alliance, said in a statement.
The groups have sued several big banks as well, according to the Times.
Fannie’s Response
A Fannie Mae spokesperson told the Times the settlement resolved “legacy allegations” against the mortgage finance firm.
“Fannie Mae takes the maintenance of all its properties very seriously,” the spokesperson told the publication. “We require the same property maintenance standards in all neighborhoods regardless of race or ethnic composition and conduct independent third-party quality control reviews of vendors hired to do this work.”
As part of the settlement, Fannie Mae agreed to increase its oversight of the maintenance of the foreclosed homes it owns and give priority to homeowners over investors when selling so-called real estate owned, or R.E.O., properties.
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