The National Fair Housing Alliance is putting the final touches to legal complaints against several undisclosed banks with very large foreclosure inventories on grounds of discrimination against communities of color and violation of the Fair Housing Act. The first complaint will be filed as early as next week.
Findings from this investigation, conducted between January and March, “will culminate in the filing of administrative complaints” with the U.S. Housing and Urban Development HUD and even lawsuits in federal district court starting next week, said president and CEO of NFHA, Shanna Smith during a press conference Wednesday.
“The Banks Are Back, Our Neighborhoods Are Not: Discrimination in the Maintenance and Marketing of REO Properties” is an undercover investigation of how mortgage banks are managing and marketing for sale their real estate owned portfolios. It alleges widespread discrimination against predominantly African-American and Latino neighborhoods.
The investigation “found striking incidents” of REO management discrimination when compared to the maintenance standards applied in predominantly White areas with comparable income and property values. Fair Housing Act violations may include various aspects of property maintenance, appraisal, listing, marketing and sales.
For example, it revealed that REO properties in communities of color were 82% more likely than REO properties in White communities to have broken or boarded windows. Properties in White neighborhoods were 32% more likely to be marketed with the proper signage than African-American neighborhoods and 38% more likely than in Latino neighborhoods.
Findings are based on detailed evaluations of over 1,000 REO properties in and around Atlanta, Baltimore, Dallas, Dayton Ohio, Miami and Fort Lauderdale in Florida, Oakland, Richmond, and Concord in California, Philadelphia, Phoenix and Washington, DC.
Four members, The Miami Valley Fair Housing Center in Dayton, Housing Opportunities Project for Excellence in Miami, Metro Fair Housing Services in Atlanta, and North Texas Fair Housing Center in Dallas, evaluated the maintenance and marketing of REO properties on a 100-point scale. Using criteria such as the presence or lack of broken windows and doors, water damage, mold, overgrown lawns, “for sale” signs, and trash on the property the total score took into account 39 different aspects of the maintenance and marketing of each property.
The goal is to attract the attention of all banks so they take “immediate action to correct the disparate treatment” discovered during this investigation, Smith said, since “the proper maintenance and marketing of REO properties is a key factor” in promoting the sale to homebuyers rather than to investors.
HUD and Fannie Mae grants helped expand the investigation into the aforementioned areas.
