Based on evidence collected in 62 cities over the past five years, the complaint alleges Fannie Mae’s maintenance and marketing of foreclosed properties showed significant racial disparities, violating the Fair Housing Act.
“We strongly disagree with these allegations and firmly believe they have no merit,” Fannie Mae said in a statement. “We are confident that our standards ensure that properties in all neighborhoods are treated equally, and we perform rigorous quality control to make sure that is the case.”
Fannie Mae — officially the Federal National Mortgage Association — is not a direct lender but purchases and guarantees loans via the secondary mortgage market.
Jim McCarthy, president and chief executive of the Miami Valley Fair Housing Center in Dayton, said Fannie Mae foreclosures are far more likely to have certain types of maintenance problems than those in white communities, based on his agency’s investigation of 71 properties in the local area.
Twenty six of the homes examined were in predominantly African American communities, 44 in mostly white communities and one in a mixed community.
The investigation found that every Fannie Mae foreclosure in black neighborhoods had at least five maintenance or marketing “deficiencies,” such as overgrown weeds, dead shrubbery or broken and boarded windows. By contrast, only about half (54.5 percent) of foreclosed properties in white communities had five or more maintenance or marketing deficiencies.
Such neglect has been going on for years, according to McCarthy.
“Fannie Mae was put on notice in 2009 about its failure to appropriately maintain and market its foreclosures in neighborhoods of color,” he said. “The foreclosure crisis hit these middle- and working-class communities the hardest, and what we’re now seeing is an illegal pattern of neglect that creates health and safety hazards for neighbors, lowers property values, and contributes to blight in the community.”
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