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08.15.2019

On August 12, 2019, a federal judge ruled that a systemic lawsuit challenging Fannie Mae’s discriminatory maintenance of its “real estate owned” (REO) properties should proceed on all claims.

The decision, by Judge Jeffrey S. White, United States District Judge for the Northern District of California, was issued in a housing discrimination case Relman, Dane & Colfax PLLC filed on behalf of the National Fair Housing Alliance and twenty local fair housing organizations. The lawsuit alleges that Fannie Mae did not conduct routine maintenance and marketing of REO properties in predominantly African-American and Latino neighborhoods but did maintain and market its REO properties in predominantly white neighborhoods. According to the complaint, after conducting a lengthy nationwide investigation of over 2,300 Fannie Mae REO properties, Plaintiffs informed Fannie Mae of the details of their findings, but Fannie Mae refused to change its behavior. Fannie Mae’s actions, the complaint alleges, have had a significant harmful impact on neighborhoods of color throughout the country, threatening the residents' health and safety and diminishing surrounding property values.

Since the lawsuit was filed, Fannie Mae has made two attempts to dismiss the claims against it; both have failed. In March 2018, the court upheld Plaintiffs’ claims for liability based on a disparate impact theory and granted leave to amend the complaint to include additional allegations of discriminatory intent. The court’s most recent decision affirms that Plaintiffs’ allegations, if proven true, make out a claim that Fannie Mae engaged in intentional discrimination with respect to its REO maintenance. The court emphasized that Plaintiffs alleged that “Fannie Mae refused to change its policy” or make any “meaningful[] change”—even after Plaintiffs informed it that its behavior violated the Fair Housing Act. The court also affirmed Plaintiffs’ rights to secure attorneys’ fees and injunctive relief under the Act.

Relman, Dane & Colfax's litigation team is led by Steve Dane, Yiyang Wu, and Sasha Samberg-Champion. Casey Epp of the Fair Housing Advocates of Northern California and Morgan Williams of the National Fair Housing Alliance.

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