HOME will receive $1.1 million from historic multi-million dollar settlement with Fannie Mae | Richmond Free Press
It took six years, but a national mortgage company finally agreed to accept responsibility for its racial bias in handling seized property.
In a landmark settlement announced on Monday, Fannie Mae agreed to pay $53 million in compensation to end a 2016 lawsuit that alleged the government-backed mortgage giant let foreclosed homes deteriorate in majority communities. Black and Latino Americans while ensuring that similar homes in predominantly white neighborhoods were maintained.
Fannie Mae has also agreed to implement practices to prevent the recurrence of such mismanagement of seized property in the future, including implementing improved housekeeping practices, prioritizing individuals over to investors for foreclosure purchases and training its employees and contractors on fair housing requirements.
Richmond-based Housing Opportunities Made is one of 20 fair-trade housing groups that will share the settlement.
“This settlement recognizes the harm done to communities of color in the Richmond area that have been particularly hard hit during the foreclosures crisis,” said Monica L. Jefferson, interim president and CEO of HOME.
Led by the National Fair Housing Alliance, HOME and 19 other affiliates have filed the groundbreaking lawsuit that grew out of the great foreclosure bubble that began with the 2008 banking meltdown. Hundreds of thousands of bad and poorly underwritten home loans are have become in default.
The settlement, ironically, comes amid a real estate boom that has seen all old foreclosed properties reclaimed, renovated and put back on the market at much higher prices.
According to HOME, this was the first federal case confirming that state fair housing laws cover the upkeep and marketing of foreclosed property.
The case was based on data collected by HOME and the other 19 organizations on Fannie Mae’s management of 2,300 foreclosed properties in 39 locations, including 40 in Richmond and surrounding locations. The US Department of Housing and Urban Development provided grants that helped the groups develop their evidence.
The lawsuit alleged that 20% of foreclosed Fannie Mae properties in black and Latino neighborhoods had 10 or more maintenance issues, including holes in exterior walls and overgrown yards, while those homes in predominantly white areas rarely had such problems.
Settlement funds will also provide “significant financial resources to meet community needs,” Ms. Jefferson noted.
After plaintiff’s attorneys and other expenses are paid, HOME and the other groups will split $35 million. HOME is to receive $1.1 million for its share. The 50-year-old Fair Housing Guardian plans to use $750,000 to bolster services to communities Fannie Mae has hurt, like down payment assistance for buyers and renovation assistance for homeowners. owners, with the rest going to existing programs.