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Fannie Mae accused of neglecting foreclosures in minority neighborhoods

Housing advocates accuse Fannie Mae neglecting foreclosed properties in minority areas.

A collection of fair-housing advocacy groups accused Fannie Mae on Wednesday of a pattern of maintaining and marketing its foreclosed houses in white neighborhoods — including in the Baltimore region — better than in minority areas.

The National Fair Housing Alliance and 19 local fair-housing organizations filed a complaint with the U.S. Department of Housing and Urban Development alleging violations of the federal Fair Housing Act after a five-year investigation documented the conditions of more than 2,100 foreclosed properties Fannie Mae owns in 34 metro areas.

The investigators presented photos at a news conference Wednesday of boarded windows, a lack of for-sale signs, broken gutters, dead animals, litter and other signs of neglect that they said were far more common at Fannie Mae-owned homes in black and Latino neighborhoods.

"As the largest owner of [foreclosed] properties in the country, everything they do is magnified," said Anne Houghtaling, director of the HOPE Fair Housing Center in Chicago, during the news conference in Washington. "You can spot them from a block away. They are the neighborhood eyesore. … Because of this, there is an uneven recovery in our neighborhoods."

Fannie Mae, a government-sponsored company charged with encouraging homeownership, disputed the allegations.

"We strongly disagree with these allegations and firmly believe they have no merit," Fannie Mae spokesman Andrew Wilson said in an email. "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. We remain dedicated to neighborhood stabilization efforts across the nation, including with respect to our maintenance of foreclosed properties."

The fair-housing groups presented maps showing the location and number of problems found in each Fannie Mae foreclosed home examined.

In the Baltimore area, it showed a high concentration of homes with at least five deficiencies — and some with more than 10 — clustered in the 21215 ZIP code of Northwest Baltimore, which is largely black. Other clusters in eastern Baltimore County, which is more white, had more homes with fewer than five deficiencies.

The researchers also spotted the pattern in the majority-black areas of eastern Washington, D.C., and in Prince George's County. In Maryland, the cities involved in the complaint were Baltimore, District Heights, Capitol Heights, Upper Marlboro and Temple Hills.

"The bottom line is that [foreclosures] in communities of color are significantly less maintained than in white communities across the country," said Gail Williams, executive director of Metro Fair Housing Services in Atlanta.

The disproportionate treatment of foreclosed properties in minority neighborhoods "festers and fosters, perpetuating the undervaluing of properties in communities of color," said Robert Strupp, the executive director of Baltimore Neighborhoods Inc., a fair-housing advocacy group that's a member of the National Fair Housing Alliance. BNI didn't participate in the research but supported the effort.

"People are more likely to buy the properties in up-and-coming neighborhoods than in neighborhoods of continuing blight," Strupp said. "Until we treat these properties fairly by putting them in the same general condition, we're going to have these disparities."

Though the housing advocates said that Fannie Mae houses were easy to spot in many areas around the country for their neglect, Baltimore's persistent vacant-housing problem may make the extent to which the federal housing agency is responsible difficult to discern.

Beatrice Scott, president of the Ashburton Area Association in Northwest Baltimore, said she wasn't aware of the Fannie Mae issue but said she hoped it could be addressed.

"Housing is a critical issue in Baltimore, and particularly we need housing for low-income persons," she said. "We have our homeless populations that are in dire need of housing, and it would just be wonderful if the availability of foreclosed housing could be used to meet this challenge."

The housing advocacy groups are calling for Fannie Mae to clean up the neglected properties and spend "millions" of dollars on grants or other compensation for those trying to buy foreclosed houses and people living in communities affected by them.

In a similar case brought by the National Fair Housing Alliance and its partners, Wells Fargo agreed in 2013 to pay more than $40 million to a settle a 2012 complaint. The group also has filed previous complaints against Fannie Mae's contractors and banks such as Bank of America, Deutsche Bank and U.S. Bank.

cwells@baltsun.com

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