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The investigation found that REO properties in communities of color were two times more likely to have more than 10 maintenance problems than those areas where the majority of residents were Caucasian. Image: Fotolia
The investigation found that REO properties in communities of color were two times more likely to have more than 10 maintenance problems than those areas where the majority of residents were Caucasian. Image: Fotolia

NFHA Amends Housing Discrimination Complaint Against Bank of America

SEP 25, 2013 2:07pm ET
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A year ago, the National Fair Housing Alliance filed a lawsuit against Bank of America for not maintaining its foreclosed properties in African-American communities up to the same standards as white communities. As of today, not much has changed, according to the NFHA.

The NFHA has decided to amend its original complaint because the ongoing investigation found five more cities that have housing discrimination characteristics which violate the Fair Housing Act.

The new cities added to the complaint were Memphis, Denver, Las Vegas, Tucson and Philadelphia. There were 116 new REO properties added to the original complaint, which originally evaluated 373 bank-owned properties serviced or managed by B of A in eight cities: Atlanta, Dallas, Dayton, Ohio, Grand Rapids, Mich., Miami, Oakland, Phoenix and Washington.

Overall, the housing discrimination complaint filed against the Charlotte-based lender now includes 621 REO assets, and more are set to come.

“Every day, Bank of America continues to neglect homes it owns in communities of color and prices decline, allowing investors to snatch up these foreclosures, turning communities into neighborhoods of absentee landlords,” said Shanna Smith, president and CEO of the National Fair Housing Alliance.

Smith said NFHA alerted the Charlotte-based lender about these problems in 2009, and noted that “Bank of America chooses to ignore its responsibility to maintain and market foreclosures regardless of the racial or ethnic makeup of the community.”  

In its investigation, NFHA and four of its member organizations—the Denver Metro Fair Housing Center, Metro Fair Housing Services, Miami Valley Fair Housing Center, and Housing Opportunities Project for Excellence—evaluated 39 different type of maintenance or marketing deficiencies, such as broken windows and doors, water damage, overgrown lawns, no “for sale” signs, trash on the property, etc.

The investigation found that REO properties in communities of color were two times more likely to have more than 10 maintenance problems than those areas where the majority of residents were white.

On the other hand, bank-owned housing units in white communities had fewer than five marketing issues nearly three times more than those in African-American neighborhoods.

“Bank of America must be held accountable for these actions,” said Arturo Alvarado, executive director of the Denver Metro Fair Housing Center. “Latino and African-American homeowners living next to these foreclosures deserve better treatment from Bank of America.”

Some highlights from the investigation revealed that out of the 27 REO homes in Denver owned by Bank of America in non-predominantly white neighborhoods, 56% of these properties had broken or unsecured doors, while 48% had unboarded windows.

Meanwhile, the 18 homes evaluated in African-American communities in Philadelphia showed that 67% had substantial amounts of trash, while 78% of these housing units did not have a “for sale” sign in the front yard.   

Additionally, one property in an African-American community in Prince George’s County in the Washington metro area was flagged for major problems on three different visits between 2011 and 2013. For example, in December 2011, investigators found trash, overgrown grass, no “for sale” sign, and damaged siding. Eight months later, a basement door was left wide open into the property and a letter posted on the door from the County Department of Environmental Resources cited Bank of America for “accumulation of litter and rubbish, high grass and weeds (height greater than 1 inch), and/or wrecked, dismantled, unlicensed, abandoned motor vehicles.” By September 2013, the same Washington property had an “unfit for human habitation” sign posted on the door.

“It’s incredibly sad to see the value of the homes in the surrounding area of a non-maintained REO plummet,” said Keenya Robertson, president and CEO of Housing Opportunities Project for Excellence, based in Miami. “Homeowners have a difficult, if not impossible time trying to refinance when they live next door to an unkempt Bank of America foreclosure.”

Smith said the Department of Housing and Urban Development is conducting their own investigation pertaining to these allegations. Smith added that NFHA is trying to find municipalities and neighbors who can help them with their case, as “litigation is still on the table” since no progress has been made in meetings with Bank of America.

A Bank of America spokesperson told National Mortgage News in an emailed statement that the lender applies uniform practices to the management and marketing of vacant bank-owned properties across the country, regardless of their location.

“Previous claims by NFHA revealed numerous, material flaws in their methodology and how they represented that information publicly,” said Jumana Bauwens, a spokesperson at Bank of America, whose REO inventory has dropped by almost 70% in the past year. “The majority of properties NFHA faulted us for were, in fact, the responsibility of other entities to maintain and market, didn’t take into account the property condition at the time we had authority to maintain it, and included properties the bank had agreed to donate to local groups in their existing condition.”

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