I recently read an article about how FNMA is being sued by the National Fair Housing Alliance (an advocacy group that represents fair housing interests, better known by real estate professionals as a “testing company”). It included a warning to realtors that work with FNMA on managing and selling its REO properties, noting that the NFHA had criticisms for some of the agents and brokers who listed the properties that it investigated, and that as the litigation progressed, they may bring some of those agents and brokers into the lawsuit as additional defendants.
“Under the Fair Housing Act, the person who owns the property, as well as anyone who has anything to do with it, has a liability,” Smith said.
“As this litigation progresses, some of those agents and brokers who have relationships with Fannie Mae could be named in the lawsuit. We don’t know who all of Fannie Mae’s brokers and contractors are, but we would love to be a friend to those agents who are trying to sell these homes, but can’t because Fannie Mae’s field service center left a bunch of garbage in the backyard.”
A lot of agents get caught up in trying to make a living, sometimes forgetting that companies like FNMA can get them into a lot of trouble, if they are not careful. You cannot escape liability by stating that FNMA told you to do something (or not to do it). If you are helping to manage the REO, and you don’t maintain a property in a predominantly minority neighbor in a similar manner to those in a predominantly white neighborhood, you could find yourself as part of this lawsuit.
Many years ago, I defended a friend who was accused by a testing company of racial steering. Despite the fact that I did not charge him anything, and we ultimately won a jury decision, his brokerage was ruined (the ongoing negative publicity hurt, as well as the time he had to spend on the defense of the action), his marriage was ruined (his wife, who is also a realtor, had been involved in some of the showings, and felt that it was her fault that he was being sued) and ultimately wound up filing for bankruptcy protection and moving out of state to start life anew. Remember, this is after winning and after not having to pay legal fees that could easily have run fifty to sixty thousand dollars!
The most revealing thing that I remember about that situation was the attorney for the testing company telling me during settlement negotiations “You should tell your client to pay us $10,000.00. The realtor never wins these things, and it will be cheaper in the long run.” While his statement was true, I am proud that my friend stood up for his principles, even though it pretty much cost him everything.
Amy Swinderman, Fannie Mae Discrimination Lawsuit Could Have Repercussions for Agents, Inman Edition, 12/06/2016 at
https://www.inman.com/2016/12/06/sweeping-racial-discrimination-lawsuit-against-fannie-mae-could-have-repercussions-for-agents-and-brokers/
