Fannie Mae must pour $53 million in aid to settle suit over housing discrimination

Bob Egelko, San Francisco Chronicle staff writer
Feb. 7, 2022: Updated: Feb. 7, 2022 6:45 p.m.

Read the article on the SF Chronicle's website here.
Read FHANC's press release for this settlement here.

Housing-rights advocates announced a settlement Monday that will provide $53 million in government aid to minority home-buyers and homeowners in 39 U.S. metropolitan areas, including two in the Bay Area, Vallejo and Richmond/Oakland.

The agreement resolves a lawsuit filed in Oakland in 2016 accusing the Federal National Mortgage Association, or Fannie Mae, of racial discrimination in its foreclosure practices: providing maintenance to homes on which it had foreclosed in largely white areas, while allowing foreclosed homes in communities of color to deteriorate, harming their neighborhoods and future residents.

The settlement does not include any admission of wrongdoing but requires the agency to assist residents in the affected districts. According to Fair Housing Advocates of Northern California, more than $35 million will be used nationwide to promote home ownership, renovate housing and provide assistance with credit and down payments.

Of those funds, $755,000 will go to each of the the two Bay Area districts for neighborhood rehabilitation, and additional sums will be available for fair-housing services, said the group’s executive director, Caroline Peattie.

She said the suit followed a four-year investigation of more than 2,300 foreclosed homes owned by Fannie Mae, including 68 in Vallejo and nearby Solano County neighborhoods and 88 in Oakland and Richmond.

According to the suit, more than 39% of foreclosed homes in Black or Latinx neighborhoods had trash visible on the property, 25% had unsecured or broken doors, and more than 41% had damaged, boarded or unsecured windows, more than twice the rates of such disrepair in homes taken over by Fannie Mae in white neighborhoods.

The agency sought to dismiss the suit, but U.S. District Judge Jeffrey White ruled in 2019 that the housing-rights groups could try to prove that Fannie Mae violated fair-housing laws by failing to change its conduct after being notified of the investigation and its findings. The groups said it was the first federal court ruling to conclude that housing-discrimination laws applied to foreclosed properties owned by the agency.
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“We poured a lot of time and effort into investigating the differences between the marketing and maintenance of foreclosed homes in communities of color compared to white communities, because we knew how big an impact this can have on the health and well-being - financial and otherwise - of neighborhoods with foreclosed properties,” Peattie said in a statement. “We are excited that Fannie Mae has made the commitments it has in this settlement.”

Bob Egelko is a San Francisco Chronicle staff writer. Email: [email protected] Twitter: @BobEgelko