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NFHA and 19
Civil Rights Groups File HUD Complaint Over Neglected
Foreclosures
Special to The Truth
Last week, the National Fair Housing Alliance (NFHA), the
Toledo Fair Housing Center, and 18 local fair housing
organizations announced the filing with HUD of a housing
discrimination complaint against Fannie Mae, one of the
largest owners of foreclosed homes in the United States.
The civil rights groups allege that Fannie Mae maintains and
markets its foreclosures (also known as real estate owned or
“REO” properties) in White neighborhoods consistently better
than in middle- and working-class African American and
Latino neighborhoods, a practice that violates the federal
Fair Housing Act. The complaint is the result of a
five-year investigation.
“Fannie Mae is wreaking havoc on middle- and working-class
communities of color nationwide through a pattern of neglect
that is frankly appalling,” said Shanna L. Smith,
President and CEO of NFHA. “Fannie Mae’s failure to take
care of its massive foreclosure inventory in African
American and Latino neighborhoods further destabilizes the
communities hardest hit by the foreclosure crisis, in clear
contradiction of its congressional charter, federal fair
housing laws, and its obligation to affirmatively further
fair housing. This systematic failure also creates health
and safety hazards, contributes to blight, and places an
unfair burden on neighbors and city governments to clean up
the problem.”
Evidence gathered from 2010 through April 2015 documents an
ongoing pattern and practice of discrimination by Fannie Mae
and its asset management contractors. Currently, NFHA and
its partners have investigated 2,106 REO properties owned by
Fannie Mae in 34 metropolitan areas encompassing 129 cities
across the United States. NFHA is joined in this complaint
by 19 of its member organizations (see Table 1 for a full
list of metro regions and fair housing organizations
involved in the complaint).
The fair housing organizations investigated the maintenance
and marketing of REOs for 39 different types of deficiencies
that affect home value, curb appeal, the security of the
home and the marketability of the property. The
deficiencies assessed by investigators include: broken,
boarded or damaged windows and doors; unlocked doors and
windows; damaged and obstructed gutters and downspouts;
safety hazards; accumulated trash; overgrown lawns and
shrubs; lack of “for sale” signs; and others.
Fannie Mae properties in communities of color had broken
doors and windows, unlocked doors and windows allowing
access to the home, excessive litter, dead or overgrown
lawns, dead animals or live animals on the property, and
other major deficiencies. Conversely, most Fannie Mae
properties in predominantly White communities did not.
These problems are simple to fix and are the responsibility
of Fannie Mae and its contractors.
“Neighborhoods of color were the first to be targeted by
predatory lenders who stripped the equity and sent the homes
into foreclosure,” said Michael P. Marsh, president and CEO
of the Toledo Fair Housing Center. “These neighborhoods now
are the victims of neglected real estate owned, foreclosed
homes that Fannie Mae owns. Fannie has a responsibility to
maintain and market the homes they own in all neighborhoods.
They, however, do a lousy job in neighborhoods of color. If
they can keep their homes well maintained in predominantly
white communities, why can't they do the same in
neighborhoods of color? Fannie Mae continues to play a role
in the devastation of the aftermath of the foreclosure
crisis. Now it is time for Fannie to provide community
relief to these neighborhoods to improve conditions and
stabilize property values.
Since 2009, NFHA has made efforts to work with the
Government Sponsored Enterprises (“GSEs”) to correct their
practices. The GSEs have a legal responsibility to treat
all neighborhoods fairly. Smith said, “Freddie Mac looked
into its practices and made good faith efforts to correct
its business model, but Fannie Mae refused to take
responsibility for its neglect in communities of color. The
difference between Freddie and Fannie properties is
striking. We now rarely find disparities in Freddie Mac’s
inventory. Fannie has to take responsibility.” She added,
"Fannie Mae has not only ignored the problem but has
continued to award millions of dollars in new contracts to
the same asset management companies that engaged in this
discriminatory behavior. We have filed this complaint after
having exhausted every possible means we could think of to
get Fannie Mae to abide by the law and work with us to
re-stabilize the damaged communities.”
The Fair Housing Act makes it illegal to discriminate based
on race, color, national origin, religion, sex, disability,
or familial status, as well as on the race or national
origin of residents of a neighborhood. This law applies to
housing and housing-related activities, which includes the
maintenance, appraisal, listing, marketing, and selling of
homes.
NATIONWIDE STATISTICS
Full national statistics and data for individual cities
available at
www.nationalfairhousing.org
Summary of Findings:
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49.5 percent of the REO properties in white communities
had fewer than five deficiencies, while only 24.4
percent of the REO properties in communities of color
had fewer than five deficiencies.
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22.1 percent of the REO properties in communities of
color had 10 or more deficiencies, while only 8.0
percent of the REO properties in predominantly white
communities had 10 or more deficiencies.
Highlights of Significant Racial Disparities:
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40.6 percent of the REO properties in communities of
color had a broken, boarded, or unsecured window,
while only 21.2 percent of the REO properties in white
communities had the same problem.
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38.5 percent of the REO properties in communities of
color had trash or debris on the premises, while
only 15.1 percent of the REO properties in white
communities had the same problem.
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29.8 percent of the REO properties in communities of
color had holes in the structure of the home,
while only 13.9 percent of the REO properties in white
communities had the same problem.
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27.3 percent of the REO properties in communities of
color had wood rot, while only 17.8
percent of the REO properties in white communities had
the same problem.
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23.9 percent of the REO properties in communities of
color had unsecured, broken, or boarded doors,
while only 11.6 percent of the REO properties in white
communities had the same problem.
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21.7 percent of the REO properties in communities of
color had exposed or tampered-with utilities,
while only 9.7 percent of the REO properties in white
communities had the same problem.
Summary of Findings in Toledo, Ohio Metropolitan Area:
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Investigation
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In the Toledo, OH metropolitan area, the Toledo Fair
Housing Center investigated 110 REOs owned by Fannie
Mae.
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38 located in African-American communities
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2 located in non-white communities
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70 located in white communities
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34 percent of the REOs in white communities had
fewer than five maintenance or marketing
deficiencies documented, while only 7.5 percent of
the REO properties in communities of color had fewer
than 5 deficiencies.
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40 percent of the REOs in communities of color had
10 or more maintenance or marketing deficiencies
documented, while only 12.9 percent of the REOs in
white communities had 10 or more maintenance or
marketing deficiencies.
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Racial Disparities
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32.5 percent of the Fannie Mae REOs in communities
of color had trash or debris on the premises, while
only 5.7 percent of the REOs in white communities
did.
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35 percent of the REOs in communities of color had
an unsecured, broken, or boarded door, while only
12.9 percent of the REOs in white communities did.
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68 percent of the REOs in communities of color had a
broken, boarded, or unsecured window, while only 29
percent of the REOs in white communities did.
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10 percent of the REO properties in communities of
color had graffiti, while none of the REOs in white
communities did.
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48 percent of the REOs in communities of color had
missing or out of place gutters, while only 21
percent of the REO properties in white communities
did.
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