RICHMOND — A coalition of fair housing groups has sued Fannie Mae, the government-backed housing lender, for failure to maintain and market its foreclosed properties in predominately African-American and Latino neighborhoods in four metropolitan areas, including Oakland and Richmond.
The lawsuit, filed Tuesday in federal district court in San Francisco, alleges that Fannie Mae engaged in a pattern of discrimination by allowing foreclosed properties to languish without upkeep that kept the homes unpurchased, attracted vandalism and crime and kept property values lower than they otherwise would be.
In comparison, foreclosed properties in predominately white neighborhoods were more carefully tended, with garbage thrown out, landscaping trimmed and homes properly secured, according to the suit.
“This is one more step in the pattern that we’ve seen where lenders divest communities of color of equity — first by denying loans to people of color, then targeting them for unaffordable loans, then foreclosing on them and finally failing to maintain and market those homes,” said Caroline Peattie, executive director of Fair Housing Advocates of Northern California, the lead plaintiff of the lawsuit, in a statement.
Twenty other housing organizations around the country joined the lawsuit, the result of a multi-year investigation that focused on 38 metro areas.
A Fannie Mae spokeswoman disputed the allegations in a statement, saying the agency aims to ensure that all properties are maintained and treated equally regardless of location. She also said that Fannie Mae has continuously improved its maintenance practices for foreclosed properties in recent years, “including the use of clear boarding nationally, adoption of technology to enhance the property inspection process, enhanced guidance to field service vendors of our expectations, and enhanced staffing in the field. Through these actions we have demonstrated our continued dedication to providing quality care to all communities.”
In Richmond and Oakland, the housing groups’ investigation found that about a fifth of foreclosed properties owned by Fannie Mae located in communities of color had 10 or more maintenance or marketing deficiencies while those in predominately white neighborhoods had fewer than 10 such issues. The group focused on 88 foreclosed properties in the two cities.
Foreclosed properties in predominately black or Latino neighborhoods were more likely to have debris on the premises, have broken, boarded or unsecured windows, and had holes in the structure, the investigation found. Both Oakland and Richmond were hard hit in the mortgage crisis, with approximately 19 percent of homes in Oakland falling into foreclosure between 2008 and 2012, according to the U.S. Census.
“The foreclosure crisis disproportionately affected non-white communities, and Fannie Mae’s failure to maintain and market those foreclosed homes harms these communities further,” Peattie said. “In the Bay Area alone, we investigated over 150 Fannie Mae-owned properties, and this pattern of neglecting properties in communities of color mirrors what other fair housing groups across the country have uncovered in their investigations of Fannie Mae properties.”