By KIMBERLEY HAAS
Officials from the U.S. Department of Justice have announced a settlement in a lawsuit against a Connecticut town that refused to allow the operation of a group home for people with mental health disabilities.
The DOJ lawsuit alleges officials in Wolcott, Conn. violated the Fair Housing Act when they denied a special use permit to L&R Realty and SELF, Inc. to open a residence for 13 geriatric adults with mental health disabilities.
Lawyers at the Justice Department filed suit last December.
“Local governments do not have the right to use zoning laws and restrictions as a vehicle to discriminate against people with disabilities,” Assistant Attorney General Kristen Clarke of the Justice Department’s Civil Rights Division said in a statement. “Individuals with disabilities have the right to equal housing opportunities, and the Department of Justice is committed to vigorous enforcement of federal law to stop municipalities from violating this right.”
Acting U.S. Attorney Leonard C. Boyle of the District of Connecticut called the town’s actions “unacceptable.”
“Wolcott’s town officials attempted to prohibit the operation of a home that would establish a place where persons with disabilities can live productive lives,” Boyle said. “The settlement agreement and future action required by the Town should serve as fair warning to other municipalities that our office is committed to pursuing violations of the Fair Housing Act in Connecticut.”
In addition to the $350,000 in monetary damages to L&R Realty and SELF, Wolcott will pay $10,000 to the United States.
The lawsuit must still be approved by the U.S. District Court for the District of Connecticut, the DOJ said.
Local leaders should take note.
A federal jury awarded nearly $5.2 million in damages against the Town of Cromwell, Connecticut, on October 15, 2021, for its actions which resulted in the closure of a small group home for six people with mental health disabilities run by Gilead Community Services.
Gilead’s lawyers argued in court that officials in Cromwell were presented with a choice in the group home matter, according to the Hartford Courant.
“It could tell the neighbors what it knew: That group homes in and around Cromwell — including one run by Gilead — have had safe, enriching relationships with their neighbors; that people with mental health disabilities living in group homes have rights just as people with mental health disabilities living with their families do. It could also do the complete opposite. It could take those concerns by the neighbors and turn them into hate and fear. It could use the situation as a political weapon,” the Courant reported.
Cromwell Mayor Enzo Faienza told the Courant at the time that the city was exploring all options, including appeal.
In Wolcott on Monday, Mayor Thomas Dunn had a different approach.
“The Town of Wolcott supports the rights of disabled persons to Fair Housing and will continue to do so in the future. The matters in litigation have been resolved to the satisfaction of all parties, and we will move ahead from here,” Dunn said in a statement to The Mortgage Note.
How does this impact the mortgage industry?
In September, officials from the Department of Housing and Urban Development joined officials from the Federal Housing Finance Agency to announce clarifications to Freddie Mac’s policies that make clear it will purchase mortgages secured by a property owned by an individual and rented to a group home for persons with disabilities.
“Clarifying these policies regarding the eligibility of group homes for the secondary mortgage market is an important step to fulfilling the Fair Housing Act’s promise of providing individuals with disabilities equal access to housing opportunities,” said HUD Secretary Marcia Fudge.
These clarifications, which were included in Freddie Mac’s September 1 update to Freddie Mac’s Seller/Servicer Guide, follow a HUD investigation of a mortgage lender who had refused to lend to a homeowner that was renting their property to a company that was operating a group home.
The lender’s refusal was based on the incorrect belief that Freddie Mac would not agree to buy the mortgage. After HUD reported this misunderstanding to Freddie Mac and FHFA, employees at Freddie Mac worked with both agencies. They ultimately agreed to revise their policies and clarify that Freddie Mac has always been willing to buy these mortgages secured by a group home. In a public statement, HUD said its goal is to encourage more lending for these group homes.
The FHFA regulates Freddie Mac, Fannie Mae, and 11 federal home loan banks which provide nearly $7.2 trillion in funding for U.S. mortgage markets and financial institutions.