Fannie Mae’s UNfair housing

The National Fair Housing Alliance (NFHA) and 20 civil rights groups (including four Consumer Action community partners) filed a federal lawsuit against Fannie Mae for racial discrimination over neglect of foreclosed (real estate owned, or REO) properties in African-American and Latino neighborhoods. The properties were located in 38 metro areas across the US.

Consumer Action staff member Audrey Perrott was able to catch up with executive directors from four fair housing agencies that joined the suit in order to find out more about their roles in exposing and combatting discrimination in their communities. These agencies have partnered with Consumer Action in a variety of ways, including by providing subject matter experts for events, attending Consumer Action trainings and ordering Consumer Action publications.

Perrott first spoke with Anne Houghtaling, the executive director of HOPE Fair Housing (HOPE) in Wheaton, IL and a former National Fair Housing Alliance staffer. The two discussed HOPE’s services and the agency’s role in the case. HOPE was established in 1968. The agency serves 30 counties in Northern and North Central Illinois, working to ensure that everyone has the chance to live in the community, home or apartment of their choice free from discrimination based on race, color, religion, national origin or any other characteristic protected under state or local laws.

In the metropolitan Chicago area, HOPE helped to investigate 353 Fannie Mae foreclosed REO properties between 2012 and 2015. Seventy-one of these properties were located in African-American neighborhoods, 52 in Latino neighborhoods, 50 in majority non-white neighborhoods and 180 in white neighborhoods. Of the properties located in communities of color, nearly 50 percent suffered from trash and debris on the premises, nearly 40 percent from overgrown or dead shrubbery, and over 36 percent from unsecured, broken or boarded windows.

“While we were saddened by what we uncovered, we were very excited to work with other groups like Housing Action Illinois to reveal the extent of the problem and, ultimately, contribute our findings to this critical lawsuit,” Houghtaling said. “I urge everyone working in fair housing to develop partnerships with national fair housing councils and housing counseling centers. Together we can do amazing work to improve our clients’ lives in a tangible, powerful way.”

Perrott also caught up with Gail Williams, the executive director of Metro Fair Housing Services, Inc. (Metro), located in Atlanta, GA. Metro was established in 1974 to promote social justice and eliminate housing and lending inequities. The agency provides education and outreach to the general public and housing industry professionals, offers complaint intake and counseling services, enforces fair housing laws and engages in public policy advocacy. The Department of Housing and Urban Development (HUD) contracts with Metro to serve Fulton, DeKalb, Cobb, Gwinnett and three other counties in the state.

Metro investigated 106 foreclosed REO properties owned by Fannie Mae in the Atlanta metropolitan region between 2011 and 2015. Seventy were located in African-American neighborhoods, two in Latino neighborhoods, eight in majority non-white neighborhoods and 26 in white neighborhoods. Over 61 percent of Fannie Mae properties in predominantly white neighborhoods had fewer than five maintenance and marketing deficiencies, compared to just 10 percent in communities of color. Approximately 90 percent of the REOs in communities of color had five or more deficiencies, compared to just over 38 percent in white neighborhoods. (These statistics are taken directly from the federal lawsuit /complaint filed against Fannie Mae.) Of the properties in the neighborhoods of color, 41 percent suffered from holes in the structure of the home, 40 percent from overgrown or dead shrubbery, and 21 percent from unsecured, broken or boarded doors.

Williams added, “African-American and Latino neighbors who live next door to neglected Fannie properties are particularly impacted by unsecured entrances that invite vandalism and endanger children; overgrown grass/shrubs and trash that affect property values; and no signage to indicate that the house is available to purchase, or to provide neighbors with a way to report problems. Underserved residents shouldn’t be afraid to be vocal and to partner with fair housing agencies like ours.”

Next, Perrott interviewed Cashauna Hill, the executive director of the Greater New Orleans Fair Housing Action Center (GNO Fair Housing). GNO Fair Housing was established in 1995 and works throughout the state of Louisiana across four program areas: education and outreach (particularly relevant to first-time homebuyers and landlord/tenant relations); enforcement (including litigation); homeownership protection (including counseling clients facing foreclosure); and public policy to further fair housing goals.

GNO Fair Housing investigated 80 Fannie Mae foreclosed REO properties in New Orleans and Baton Rouge between July 2011 and October 2015. Of these properties, over 29 percent (located in predominantly white neighborhoods) boasted fewer than five maintenance deficiencies, while none located in communities of color did (but 34 percent had a full 10 or more maintenance deficiencies). Around 17 percent of the properties in the communities of color also suffered from damaged steps and handrails, while none in the white neighborhoods did. Furthermore, over 50 percent of the properties in communities of color had overgrown or dead shrubbery, while only around 18 percent did in the white neighborhoods.

Hill said, “Leaving these properties to rot—properties that were already hard hit by the foreclosure crisis—borders on redlining. It is clear from our investigation that Fannie Mae’s actions are further exacerbating the foreclosure crisis and decreasing the property values in communities of color. These are communities that have already lost record amounts of wealth in the wake of the crisis.”

“While there is a lot of work to be done,” Hill continued, “it is important for us to acknowledge that we have made significant strides. We [fair housing advocates] are in a prime position to give voice to the disparate impact of Fannie Mae’s policies. We must continue to shine a light on this type of blatant discrimination.”

Finally, Perrott spoke with Caroline Peattie, the executive director of Fair Housing Advocates of Northern California (FHANC), located in San Rafael, CA. FHANC started its fair housing program in 1982 under what is now the Homeward Bound program. The agency incorporated under the name Fair Housing of Marin in 1984. It currently serves Marin, Sonoma and Solano counties.

According to FHANC, “Our mission is to ensure equal housing opportunity and to educate the community on the value of diversity in our neighborhoods.” FHANC’s services include: fair housing counseling (incorporating, in some cases, intervention, mediation, enforcement and representation); education, outreach and training; pre-purchase help for first-time homebuyers; foreclosure prevention assistance; aid for distressed homeowners with loan modifications or other options; and systemic investigations to uncover pervasive discrimination.

When FHANC (along with the NFHA) investigated 88 Fannie Mae foreclosed REO properties in Oakland and Richmond, CA and 68 in the Vallejo, CA metropolitan area, it found significant racial disparities. In the Vallejo metropolitan area, 39 percent of the REO properties in communities of color had trash or debris on the premises, as opposed to only 10 percent of those in white communities. Furthermore, 31 percent of the properties in communities of color suffered from holes in the structure of the home, while only 16 percent did in the white communities. Finally, 22 percent of the properties in communities of color had a broken, boarded or unsecured windows, while only 11 percent did in the white communities

Peattie’s advice for other groups that see systemic violations in their communities is to “Talk to those fair housing agencies that have done this work. In terms of REO properties that have not been maintained and communities addressing blight, there are a lot of agencies that have struggled with this issue.” Peattie also encouraged groups to contact NFHA and talk to as many people as possible.

“It was evident from speaking with the fair housing agencies that they are doing an amazing job at righting the wrongs brought about by Fannie Mae and other financial institutions,” Perrott said. “And ultimately, they want to see Fannie Mae abide by established fair housing law. They would also like to see some sort of monetary compensation to rebuild the communities of color that have been hardest hit and lost records amount of wealth.”

In 2009, the NFHA initiated the REO investigations and made recommendations to both Fannie Mae and Freddie Mac about its housing discrimination concerns. (For more information, see “Here Comes the Bank, There Goes Our Neighborhood,” issued by the NFHA on April 11, 2011.) In addition, local NFHA members spoke with their national headquarters about concerns regarding REO properties in their communities, prompting the NFHA to train staff at other fair housing agencies across the U.S. on the evidence collection methods used in its investigations and on how to conduct their own, similar investigations.

The fair housing agencies collected evidence based on 39 data points that were identified as important to protecting, securing and marketing the homes under investigation. Points were deducted for property damage. Investigators also took and reviewed over 49,000 photographs of the properties for visual documentation. From July 2011 to October 2015, the investigators collected evidence from more than 2,300 foreclosed REO properties.

Based on outstanding leadership, Consumer Action awarded the National Fair Housing Alliance the Consumer Excellence Award (Community) at our 45th anniversary event in Washington, DC this past October.