Horne v. Harbour Portfolio

Private investor groups Harbour Portfolio VI, LP, and Harbour Portfolio VII, LP (collectively, Harbour) (defendants), bought foreclosed properties from Fannie Mae after the 2007–2009 housing market crash and resold them using installment land contracts, also called contracts for deed (CFDs). Often the homes were dilapidated, but Harbour did not make any repairs before resale at four or five times the amount Harbour paid for them. The CFDs carried interest rates at 9.9 or 10 percent and placed all responsibility for repairs, unpaid property taxes, and insurance on the home buyer. Each CFD allowed Harbour to cancel the contract in the event of default, evict the buyer, and keep all amounts the buyer had paid. Demarkus Horne and others who bought homes from Harbour (plaintiffs) sued Harbour for “reverse redlining,” meaning Harbour extended credit on unfair terms based on the borrower’s race and geographic location. The claimants argued that Harbour purchased only Fannie Mae-owned homes in minority neighborhoods, then sold them using only yard signs and word of mouth to intentionally target African Americans, in violation of fair-housing and lending laws. Fannie Mae owned less than a quarter of foreclosed homes sold at the time. In Georgia counties, Fannie Mae homes were in neighborhoods that were 71 percent Black, while non-Fannie Mae foreclosed homes were in neighborhoods that were 48 percent Black. As a result, the claimants argued that Harbour’s predatory lending practices disparately impacted African Americans. Harbour moved to dismiss the suit for failure to state a legally cognizable claim.