On Monday, the National Fair Housing Alliance (NFHA) filed a formal complaint to the Department of Housing and Urban Development alleging that foreclosed properties in white areas are much better maintained and marketed by U.S. Bank than those in neighborhoods of color. The week before the same group filed a similar complaint against Wells Fargo.
Earlier this month the NFHA announced the results of an undercover investigation into the ways the nation’s financial institutions are failing to maintain and market Real Estate Owned (REO) properties in black and Latino neighborhoods. A report of the investigation, “The Banks Are Back, Our Neighborhoods Are Not: Discrimination in the Maintenance and Marketing of REO Properties,” (PDF) includes incidents of discrimination in the care and maintenance of properties in Washington D.C., Baltimore, Philadelphia, Dallas, Miami, Atlanta, Oakland, Calif., and Dayton, Ohio.
“This report offers evidence that banks responsible for peddling unsustainable loans to communities of color and triggering our current foreclosure crisis are continuing to damage those communities by failing to properly maintain and market the properties they own,” said Shanna L. Smith, President and CEO of the National Fair Housing Alliance.
The evaluations took into account 39 different aspects of the maintenance and marketing of each property. Overall, REO properties in communities of color were 42 percent more likely to have more than 15 maintenance problems than properties in white neighborhoods. Some trends the investigation revealed include:
- REO properties in communities of color were 82 percent more likely than REO properties in white communities to have broken or boarded windows;
- REO properties in White neighborhoods were 32 percent more likely to be marketed with the proper signage than African-American neighborhoods and 38 percent more likely than in Latino neighborhoods; and
- Newer homes generally scored higher than older homes, but racial and ethnic disparities persisted with non-structural factors such as curb appeal and signage.
“We hope that banks will heed the information in this report and take immediate action to correct the disparate treatment we have found,” continued Smith. “The proper maintenance and marketing of REO properties is a key factor in the sale of homes to families rather than to investors.” The report contains details specific to each city and gives extensive recommendations on how to fix these problems.