The National Fair Housing Alliance (NFHA) and 20 fair housing organizations throughout the country, represented by Relman Colfax PLLC and co-counsel, reached a landmark $53 million settlement agreement with Fannie Mae (formally known as the Federal National Mortgage Association).  

The agreement settles a lawsuit Relman Colfax filed on behalf of the fair housing groups in 2016. The suit alleged that in the wake of the foreclosure crisis, Fannie Mae maintained and marketed its foreclosed homes well in predominantly white neighborhoods, selling them to owner-occupants and preserving neighborhoods, while allowing homes in communities of color to fall into disrepair, leading to prolonged vacancy, sales to out-of-town investors, and neighborhood destabilization.  

The case against Fannie Mae was the first time a federal court confirmed that the nation’s fair housing laws cover the maintenance and marketing of foreclosed homes, known as “Real Estate Owned” or “REO” properties. Over the course of the litigation, U.S. District Court Judge Jeffrey S. White denied both of Fannie Mae’s motions to dismiss, allowing Plaintiffs’ disparate treatment and disparate impact claims to proceed to discovery. 

The settlement agreement will have far-reaching implications. The plaintiffs will invest the vast majority of the settlement monies directly back into the communities that were harmed. The relief will fulfill a central purpose of the Fair Housing Act: ensuring equitable treatment of neighborhoods regardless of their racial makeup.  

NFHA and the plaintiff fair housing organizations will use over $35 million of the settlement to promote homeownership, neighborhood stabilization, access to credit, property rehabilitation, and residential development in the 39 metropolitan areas at issue in the case. The plaintiffs will manage and disburse the settlement funds, providing much-needed grants, including down-payment assistance for first-generation homebuyers and renovations for homes that languished in foreclosure. The grants will also include innovative programs and partnerships to promote fair housing.  

In addition, Fannie Mae has implemented practices that will help prevent harmful treatment of communities of color in the future, including increasing its oversight of maintenance of properties it owns, prioritizing owner-occupants rather than investors as purchasers of REOs, and ensuring that it complies with fair housing laws by providing fair housing training to its employees and vendors. 

The plaintiffs’ 2016 allegations against Fannie Mae arose after a comprehensive, four-year investigation of more than 2,300 Fannie Mae-owned foreclosed properties in 39 metropolitan areas in the country. The plaintiffs collected more than 49,000 photographs revealing poorly maintained properties in Black and Latino communities, particularly as compared to properties in predominantly White neighborhoods.   

The Relman Colfax litigation team includes Reed Colfax, Jennifer Klar, Yiyang Wu, Rebecca Livengood, Lila Miller, Soohyun Choi, Gemma Donofrio, and Ted Olds, with paralegal assistance from Alicia Menendez-Brennan, Reed Canaan, Joëlle Simeu, Ella O’Leary, Margaret Moran, and Mariana Boully Perez. Our co-counsel include Stephen Dane of Dane Law LLC; Morgan Williams, NFHA’s General Counsel; and Julia Howard-Gibbon, Supervising Attorney of Fair Housing Advocates of Northern California. 

A copy of the settlement agreement can be found here.

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