foreclosure_signs_web.jpgWASHINGTON, D.C. —As a result of an undercover investigation that it said found that foreclosed properties in white areas are much better maintained and marketed than properties in African-American and Latino neighborhoods, the National Fair Housing Alliance (NFHA) and four of its member organizations have filed a federal housing discrimination complaint with the U.S. Department of Housing and Urban Development against U.S. Bancorp and U.S. Bank National  Association.

The alliance said its investigation of 177 foreclosed properties owned by U.S. Bank shows the financial giant has engaged in a systemic practice of maintaining and marketing its foreclosed, bank-owned properties (also known as Real Estate-Owned or REO properties) in a state of disrepair in communities of color, while maintaining and marketing REO properties in predominantly white communities in a far superior manner. 

The investigation evaluated REO properties in seven metropolitan areas: Miami/Fort Lauderdale; Atlanta, Ga.; Chicago, Ill.; Baltimore, Md.; Dayton, Ohio; Oakland/Richmond/Concord, Ca.; and Washington, DC. 

“Our findings underscore the obvious: Properties that are poorly maintained not only lose value but have a higher likelihood of selling to an investor, rather than to a family,” said Shanna L. Smith, NFHA president and CEO. “U.S. Bank is making it harder for the market to come back in communities of color.”

SOUTH FLORIDA HIT

The Washington, D.C-based National Fair Housing Alliance and the four member organizations — Housing Opportunities Project for Excellence in Miami; the Miami Valley Fair Housing Center in Dayton, Ohio; Metro Fair Housing Services in Atlanta; and HOPE Fair Housing Center, Wheaton, Ill. — evaluated the maintenance and marketing of REO properties for the existence of 39 different types of maintenance or marketing deficiencies, such as broken windows and doors, water damage, overgrown lawns, no “for sale” sign, trash on the property, and other deficits.

“South Florida is one of the worst hit areas in the nation for numbers of foreclosures. The banks whose abusive lending practices helped cause this problem must play an equal part in the rebuilding our communities,” said Keenya Robertson, president and CEO

of Housing Opportunities Project for Excellence, Inc. (HOPE) in Miami.

“The first step should be making sure that all of the properties they own through foreclosure are adequately maintained and marketed, regardless of where they are located.”

TRUSTEE VS. SERVICER

Teri Charest, of U.S. Bank’s corporate public relations office, said, “We have not received a single detail on any of the properties in the complaint. Without knowing the addresses, it's impossible to know the rightful owner, the servicer or the condition of the property.”

As one of the nation's largest corporate trustees, she said, “in the vast majority of cases where U.S. Bank is involved in a foreclosure, we serve as a trustee for an investment pool where the former mortgage was held, and have no role in servicing or maintaining the property. That is the responsibility of the servicer (typically another bank), and not the trustee.

“When we do own a property,” said Charest, “we have a strong and comprehensive process in place to regularly inspect and maintain properties to marketing standards where we have legal access, regardless of their location.”

CONSORTIUM

Founded in 1988, the Washington, D.C.-based National Fair Housing Alliance is a consortium of more than 220 private, nonprofit fair housing organizations, state and local civil rights agencies, and individuals from throughout the United States.

The NFHA filed a HUD administrative complaint against Wells Fargo last week. Earlier this month, NFHA issued a report on the findings of its nationwide REO investigation, The Banks Are Back, Our Neighborhoods Are Not: Discrimination in the Maintenance and Marketing of REO Properties. The report details the results of the evaluation of more than 1,000 REO properties nationwide, and cites what NFHA calls disturbing evidence that the same banks that peddled unsustainable loans to communities of color and triggered the current foreclosure crisis are now exacerbating damage to those communities.

The group emphasized that the work providing the basis for the publication was supported under a U.S. Department of Housing and Urban Development grant, and that interpretations do not necessarily reflect the views of the Federal Government.

NATIONAL CONCERN

“We are simply asking U.S. Bank to do routine maintenance and marketing of their REO properties in Dayton,” said Jim McCarthy, president and CEO of the Miami Valley Fair Housing Center. “The neglect of these properties by U.S. Bank leads to the deterioration of neighborhoods, the loss of property values, and the decline of our tax base.”

The alliance said it found that nationally, and in each of the seven metropolitan areas, U.S. Bank’s REO properties in communities of color were far more likely to have several deficiencies in maintenance or marketing than REO properties in predominantly white communities. 

“Without routine maintenance, these properties have become an eyesore for Atlanta’s neighborhoods and should be an embarrassment for U.S. Bank,” said Gail Williams, executive director of Metro Fair Housing Services, Inc. in Atlanta. “Atlanta’s neighborhoods are being victimized over and over again by the big banks; first with predatory loans, then denying loan modifications, through the foreclosure crisis, and now with poorly maintained REO properties.”

SIGN OF CARING

Without a “for sale” sign, for example, potential homebuyers driving in the neighborhood would simply not know the property is available.  Also, if there is storm damage or unauthorized occupants, neighbors have no one to call. With a for sale sign, people know whom to contact to visit the home or neighbors can call a real estate agent to report problems. In Dayton, 94 percent of all U.S. Bank properties in communities of color were missing a for sale sign, the alliance said, while in Chicago and the Oakland/Bay Area, 68 percent and 64 percent of all properties in communities of color had the same deficiency. 

“A for sale sign is immediately recognized as a marketing tool. When you see a professional sign, you know someone is promoting the home,” said Smith.

Photo: Keenya Robertson