The Metropolitan Milwaukee Fair Housing Council and 19 other local fair housing organizations nationally reached a $53 million settlement with Fannie Mae this week over allegations that the company treated foreclosed homes in communities of color unfavorably.
MMFHC and other plaintiffs alleged Fannie Mae, formally known as the Federal National Mortgage Association, maintained and marketed its foreclosed homes in predominantly white neighborhoods while allowing similar homes in predominantly African American and Latino neighborhoods to fall into disrepair across 38 metro areas.
The lawsuit, which stemmed from an investigation conducted from 2011-16, alleged that differential treatment exacerbated the damage caused by the 2008 mortgage crisis and impeded recovery in the affected neighborhoods. The investigation included more than 2,300 Fannie Mae-owned foreclosed properties nationally, 330 of which were located in metro Milwaukee.
MMFHC’s allocation of the settlement amount was not disclosed.
“For many decades, residents of metropolitan Milwaukee have been harmed by discriminatory housing practices that deny us equal housing opportunities and separate us from one another based on race and national origin,” said William Tisdale, president and chief executive officer of MMFHC.
“Discrimination in the housing market has caused immeasurable financial harm to Black families and communities, as well as to other people of color, and has resulted in this being one of the most segregated regions in the nation, with some of the greatest racial disparities in economic wellbeing. As our case against Fannie Mae demonstrated, unfair housing practices continue into the 21st century. We are gratified that this agreement with Fannie Mae will enable our community to undertake some efforts toward healing and repair,” he added.
Of the 330 Fannie Mae-owned, Milwaukee-area properties included in the investigation, 67% in predominantly white neighborhoods had fewer than five maintenance deficiencies, compared to 40% in communities of color, the suit alleged. Meanwhile, 60% of the properties in communities of color had more than five deficiencies, compared to 33% in predominantly white neighborhoods.
The share of properties with broken or boarded windows in largely white neighborhoods was 20%, compared to 47% in communities of color.
MMFHC and other councils said they will invest the vast majority of the settlement amount back into the communities they allege were harmed, including $35 million to promote home ownership, neighborhood stabilization, access to credit, property rehabilitation and residential development.
In a statement, the National Fair Housing Alliance said Fannie Mae implemented practices that will “help avoid similar harmful treatment of communities of color in the future,” including increasing its oversight of maintenance of properties it owns and prioritizing owner-occupants rather than investors as purchasers of real estate-owned properties.