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Hartford Renter's Fight Leads To Fannie Mae Policy Change

Renter Wins Fannie Mae Fight

By KENNETH R. GOSSELIN | The Hartford Courant

December 16, 2008

What began with a single mother in Hartford fighting her eviction has led to a policy change by Fannie Mae allowing renters to remain in their homes after their landlords are foreclosed on, a switch that could help thousands of renters across the country.

Fannie Mae, one of two giant mortgage companies taken over by the federal government, said Monday it will end eviction proceedings against renters if they are current with their payments. Fannie Mae had a formal policy of evicting tenants following foreclosures against their landlords.

Legal Aid lawyers in Hartford — and subsequently, New Haven — began fighting tenant evictions by Fannie Mae in Housing Court after Congress passed a financial market bailout bill containing provisions protecting tenants in good standing from eviction.

Housing advocates praised Fannie Mae's reversal Monday and said it was inspired by the case of Evelyn Colon, a mother of three who lives in an apartment on Marshall Street in Hartford's West End. Colon had been served with eviction papers, even though she is current with her rent payments, her lawyers say.

"There is no question what the folks in Connecticut did took it the extra step," said Danilo Pelletiere, research director at the National Low Income Housing Coalition in Washington, D.C. "They made the argument stick."

Fannie Mae would not say Monday whether the new bailout legislation compelled it to change its policy. A spokesman noted that the tenant eviction policy had been under review for "several months." The bailout bill passed in early October.

In November, Fannie Mae and Freddie Mac temporarily suspended foreclosure sales and tenant evictions during the holidays. Fannie Mae's new tenant eviction policy will go into effect Jan. 9.

"Tenants caught in foreclosures are under stress and strain," Fannie Mae spokesman Brian Faith said. "Putting this policy in place will let them stay."

Ever since Colon's story became public, Fannie Mae has maintained that it tries to work with tenants who are displaced from foreclosed properties.

Colon said Monday she had no idea that her case could have national implications.

"I knew it would help other people," Colon said. "I didn't know it would get this big."The bailout legislation applies to federal agencies that control mortgages. Legal Aid lawyers argued that provisions in the law pertained to both Fannie Mae and Freddie Mac because they were taken over by the federal government.

The policy change — Freddie Mac said Monday it expects to follow suit — will have vast implications for renters because Fannie Mae and Freddie Mac guarantee or own half of the country's residential mortgages, which apply to buildings that house one to four families.

Fannie Mae said Monday that the change could affect 4,000 renters almost immediately. Housing advocates say the number could rise much higher if the foreclosure crisis deepens. Connecticut is better off than many states, but foreclosures are rising.

"We're very gratified that Fannie Mae has decided to do the right thing," said David A. Pels, a staff attorney at Greater Hartford Legal Aid in Hartford.

However, Pels said, Fannie Mae so far has not offered Colon a lease for her three-bedroom apartment, where she continues to live.

Housing experts say it is easier to sell a foreclosed property without tenants. But community housing advocates say vacant buildings can contribute to the decline of neighborhoods.

Stephanie D'Ambrose, the Greater Hartford Legal Aid attorney representing Colon, said the challenge was strong on legal and moral grounds.

"Why should those people who've paid their rent lose their homes?" D'Ambrose said. "There was something fundamentally unfair about that."

The fight that began in Hartford gathered momentum in recent weeks in New Haven. Legal Aid attorneys there adopted the argument against evictions in two cases and took it a step further by threatening a class-action lawsuit against Fannie Mae on behalf of renters nationwide.

On Sunday, Fannie Mae sent a letter to New Haven Legal Aid attorneys informing them of the change in policy.

The policy change comes as Legal Aid staffing is being cut because sources of funding are drying up. D'Ambrose, at the forefront of the Colon case, faces a layoff in March.

U.S. Sen. Christopher Dodd, D-Conn., praised the policy change, which came four weeks after Dodd wrote to the federal housing agency overseeing the mortgage giants, urging them to comply with a new federal law that Dodd co-authored.

"This decision will bring great relief to thousands of renters who were in the wrong place at the wrong time and were being forced from their homes as a result," Dodd said.

When Fannie Mae moved to evict Evelyn Colon from her foreclosed Hartford apartment, the single mother fought back. On Monday, the mortgage giant said it would allow Colon and thousands like her across the country to stay in their homes.