Settlement in Lawsuit on Behalf of Lesbian Homeowners: Fannie Mae Mortgage Policies Change

[Bluebear]

(New York, August 20, 2010) — Today, Lambda Legal announced the settlement of its lawsuit on behalf of a lesbian couple against Countrywide Financial in the Southern District of New York federal court after the Federal National Mortgage Association, known as Fannie Mae, announced policy changes allowing homeowners to add their domestic partners to their home’s deed without penalty.

"We applaud the nation's largest mortgage-buyer for reviewing its policies and updating them so that homeowners can tell lenders 'we are a family,' and know that their family will be respected," said Thomas W. Ude, Jr., Senior Staff Attorney for Lambda Legal. "Under these Fannie Mae policies, same-sex couples across the country will not be punished for sharing ownership of their home."

Lambda Legal represents Adola DeWolf, a teacher in the juvenile justice system, and Laura Watts, a college administrator, who have been in a committed relationship since 2004. After deciding to move in together in 2005, the couple attempted to add Watts' name to DeWolf's deed and mortgage. After the couple did so, Countrywide claimed the couple had breached their Fannie Mae loan agreement because Fannie Mae's policies permitted such transfers to certain family members but did not recognize Watts as a member of DeWolf's family. The couple then faced the prospect of a foreclosure action on the mortgage if they did not pay the $80,000 mortgage balance within 30 days. Fortunately, the couple was able to refinance in time to avoid losing their home.

In May 2007, Lambda Legal filed suit on the couple's behalf, and that lawsuit prompted discussions not only with the lender concerning its actions but also with Fannie Mae concerning its policies. In August and December 2008, Fannie Mae announced changes to forthcoming updates of its Selling and Servicing Guides to allow homeowners to add another person who will live in the home, related or not, to their mortgage and title. Because Fannie Mae buys only from approved mortgage sellers, like Countrywide, this change will affect all of the many banks and mortgage companies that issue Fannie Mae loans. "We hope that other leaders in the home mortgage industry, and all mortgage lenders, will follow Fannie Mae's lead," Ude adds.

After Fannie Mae's policy change announcement, DeWolf and Watts were able to reach a financial settlement with Countrywide.

"We wanted both of us to own our home, but instead spent weeks scrambling to make sure that we didn't lose that home—all the time knowing that for families who fit the bank's definition, the whole process is so simple. Fannie Mae's new policies ensure that other couples, whether married or not, will be able to share home ownership without risking the loss of the very home they share," said Adola DeWolf.

The case is DeWolf and Watts v. Countrywide.

http://www.lambdalegal.org/news/pr/ny_20100820_fannie-mae-policies.html