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Big Banks Slack on Maintaining Foreclosed Homes in Minority Areas, Complaint Charges

Housing advocates allege that Wells Fargo and U.S. Bank violated the Fair Housing Act by taking better care of foreclosed homes in white neighborhoods than in black and Latino neighborhoods.

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(Justin Sullivan/Getty Images)

Update 4/17: The National Fair Housing Alliance filed their complaint against U.S. Bank today, also for an alleged violation of the Fair Housing Act. Read the complaint.

Wells Fargo and U.S. Bank have let foreclosed homes in black and Latino neighborhoods lapse into disrepair, while bank-owned homes in mainly white neighborhoods are better cared-for, according to housing advocates.

The National Fair Housing Alliance, a non-profit group, brought a formal complaint to the Department of Housing and Urban Development last week alleging that Wells Fargo violated the Fair Housing Act by failing to keep up homes in minority neighborhoods. Today, the group announced they are also filing a second complaint, against U.S. Bank.

Earlier this month, the group released a survey, which was funded in part by HUD, of more than 1,000 unoccupied, foreclosed homes across the country owned by unspecified banks. When a house is foreclosed upon, the bank that takes it over is responsible for maintaining it. The report cites evidence — photos and interviews with neighbors — showing houses becoming dilapidated under banks' watch.

The complaint against Wells Fargo claims that among more than 200 homes surveyed, those in black and Latino neighborhoods were much more likely to have yards filled with trash, broken doors, damaged windows, and other signs of neglect. Fewer homes in those neighborhoods had "for sale" signs visible. For example, 68 out of 149 homes in black and Latino neighborhoods had damaged roofs, compared to only nine out of 69 properties in white neighborhoods.

The study looked at homes owned by Wells Fargo in Washington D.C., Baltimore, Philadelphia, Dallas, Miami, Atlanta, Oakland, Calif., and Dayton, Ohio.

A spokeswoman for Wells Fargo said in an emailed statement that the bank "conducts all lending-related activities in a fair and consistent manner without regard to race: this includes maintenance and marketing standards for all foreclosed properties for which we are responsible." She also said that the bank has a dedicated department that maintains and markets foreclosed properties from loans that are within its portfolio. Since the complaint did not identify specific properties, she said, Wells Fargo has not been able to investigate its claims.

U.S. Bank did not immediately respond to our request for comment, and a spokesman for HUD declined to comment on the complaint.

The report also pointed out that there were simply fewer bank-owned foreclosed properties in white neighborhoods than in minority neighborhoods, an indication, it says, of the fact that African-American and Latino communities were disproportionately affected by the subprime mortgage crisis.

Numerous studies have shown that lenders targeted minorities for the riskiest loans, and often charged them more than similarly qualified white borrowers. A report from the Center for Responsible Lending found that black and Latino homeowners were twice as likely to lose their homes to foreclosure than white homeowners. (The center was started with support from the Sandler Foundation, which is also the major funder of ProPublica.) In the biggest settlement to come out of the government post-bubble investigation of discriminatory lending practices, lender Countrywide (now owned by Bank of America) agreed to pay $335 million to settle a Department of Justice suit.

Nationally, banks or investors own roughly half a million foreclosed homes, and the Federal Reserve estimates this will increase to 1 million this year. Some banks and investors are looking to unload the properties en masse. Fannie Mae and Freddie Mac, who own about half the properties, are piloting a program for bulk sales of their foreclosed properties that requires they be offered as rentals. Other lenders are turning into landlords themselves.

The Center for Responsible Lending?  The Sandlers started this - really? 

The same Sandlers that owned Golden West Financial and pretty much invented and specialized in the subprime pick-a-payment loans?

Ironic, to say the least…

The last sentences tell the story:  By keeping these properties out of service, entire “minority” neighborhoods can be turned into feudal—sorry, I totally meant “rental”—communities.

If they’re really careful about it, and tithe to the zoning boards, the banks might be able to also provide work for the people who live there and own all the stores where they shop.

What bank wouldn’t want a Company Town, packed with serfs?

I would like to have seen the comparative numbers on the broken windows and doors and trash in the yard broken down by neighborhood.

Not to say there isn’t a problem with what the banks are doing, but for the author to claim that “trash, broken doors, damaged windows” are signs of neglect avoids a more obvious issue of vandalism.

Did the survey take into account the condition of other properties in the neighborhood or did they also survey the condition of the property when the bank took possession? Until the National Fair Housing Alliance has done nothing but attempt at a race baiting complaint against the banks.  UFHA, come back when you actually have something to bring to the table.

Have you visited a public school in a latino or black neighborhood VS a public school in a white neighborhood?
Or visited a Grossery store, a medical building, or a public park in both area?

Is it racist? I am sure there is another way of calling it but I don’t know what word to use.

Here in the United States where we brag about how equal we all are,
but we have neighborhoods for the poor, the middle class, the rich, and the wealthy.

I rest my case.

Don’t missunderstand me there is nothing wrong with being wealthy.
I have been in many countries around the world but I have not seen poor and rich separated as much as I can see here in the USA.

not racist———gabor ,, im sorry , i dont think u have a clue what the word means!—- always gonna be people who have more tha n others.. always gonna be rich and poor,,, as well as in between—- u sound like a typical ,tired, old ass,wore out liberal—

Gabor, I guess you haven’t visited a poor WHITE neighborhood.  You’ll find similar conditions there as you find in a poor black or hispanic neighborhood.

The strategy in south after the Civil War included a divide and conquer program to pit poor whites against poor blacks so that neither group could find ways to promote their common interests.

It sounds like you would have fit in very well.

Unless my rusty math skills are decieving me, based on the numbers in the article “68 out of 149 homes in black and Latino neighborhoods had damaged roofs, compared to only nine out of 69 properties in white neighborhoods.”, that means 45.6% vs.13.0%.  That IS quite a difference.  However, the socio-economic makeup of the neighborhoods must be taken into account, too.  We all know that a poor white neighborhood would have its share of drug dealers, gangs, truancy, vandalism, etc., too, as would a poor Black or Latino neighborhood.  To not take the socio-economic, not to even mention the condition of the homes when received in foreclosure, into consideration is not comparing apples to apples.  It would be interesting to see comparable figures for all 3 poor nighborhoods as well as for all 3 affluent neighborhoods.  My guess is that the difference would be nil then.

If accounting for the condition of the homes when seized by foreclosure is not considered, I believe no valid comparison can be made.  No bank is going to invest money into a foreclosed $50,000.00 home as readily as a foreclosed $150,000. home.  General maintenance of lawns alone is an expense they don’t want to incur especially if the home is under water.  Just the interior cleanings of homes before marketing them would be presumably different based on the fact that the $150,000 home would likely be larger than the $50,000 home.  However, the ammenities of the more expensive homes would likely attract more buyers than the less expensive homes with no ammenities.

The inferences made and the conclusions drawn by the author(s) of this article leave much to be desired, and, therefore, I’m discounting the “facts” as presented.

Gabor:  I live in a relatively medium-sized city…Lakewood, CA, and we have latinos, African Americans, and whites…some of whom have lived in Lakewood since it was built in the early 1950’s.  The homes in our neighborhoods are very well kept in most instances, and the people who live in the homes are proud of that fact.  We do not have a separate area for the African Americans to live or the Latinos….we are all living in the same neighborhoods.  The problem is that most cities do not integrate as we did.  The services in our community are excellent (we’re probably one of the ONLY cities in Los Angeles County that actually has a surplus in our General Fund and are particularly careful with the money that is spent.  Our roads are paved often; we don’t have potholes (much like Long Beach, CA, which is just next to our city), and we have excellent police, fire, and EMT coverage.  It takes a whole city with a good city government to make sure that ALL homes and neighborhoods are in good condition no matter who or what race lives in there!  I’m proud of my city, and it’s just too bad that some other cities just aren’t as diligent!

I live in a medium-sized city in Southern California….we have NO integrated neighborhoods.  My neighborhood, for example, has African American neighbors, Latino neighbors, Asian neighbors, and white neighbors…..we all integrate very well.  Granted, we don’t socialize as much as you used to in the 1950’s and you don’t often know the names of most of your neighbors, but we live together in a fairly nice middle-class neighborhood in a city that was built in the early 1950’s to house returning GI’s who went to work at the local aircraft factory.  Our city is probably one of the few in Los Angeles County that has money in it’s General Fund, spents its money wisely, and still manages to take care of our streets, our beautiful parks, our neighborhoods, etc.  We have over 8 beautiful, large parks in the city, and they are always kept clean and nice for use by the community.  I guess I consider myself lucky to live in such a great city….I don’t even think we’ve had very many foreclosures in the area, and if we did, they were well taken care of after the people moved out.  I guess not every part of the country can boast of this.

Katie, a point you’re missing is that they own the properties no matter how much they’re worth and have a responsibility to maintain them.

Maybe they should have figured in the cost of ownership before they foreclosed.  After all, that’s the excuse they use when foreclosing, so you’d think a bank would understand money management at least as well as its clients.

As I said, though, that’s not the goal.  This is just part of the ongoing attack.

With a foothold in the neighborhood, they’ll use it to drag down local property values until they can foreclose on the neighbors, then sell it to a developer for yet more apartment buildings, strip malls, and condos.

Smart towns should start condemning these properties, declare them blights, and claim them under eminent domain to turn them over to the people the bank evicted.

@ Jeff and Ed I guess you both didn’t get the point I was trying to make.
and Jeff Iam no liberal but you sure sound like a right wing nut who can only insult people. But I would not expect anything else from someone who may have not been out of their county line in all their life.
Go visit other countries then you bot can see what I was talking about.
There is no redlining with neighberhoods like here in the states.
I am sure there is a few exeptions but rare.

It is funny that here in Propublica I was called a liberal now, and not a long time ago I was called right wing republican. Maybe I can see outside of the box wich both of you can’t.

This article is part of an ongoing investigation:
Foreclosure Crisis

Foreclosure Crisis: Banks and Government Fail Homeowners

Banks and the government have fallen short in helping homeowners in danger of foreclosure.

The Story So Far

Systemic failures at the country’s banks and mortgage servicers have exacerbated the most severe foreclosure crisis since the Great Depression, and government efforts to limit the damage have fallen short. ProPublica created an unrivaled database of homeowners who have faced foreclosure, opened a Facebook page to encourage homeowners to share their stories, wrote profiles of some of them, and incorporated their experiences into our reporting. We also provided a comprehensive rundown of the numbers behind the crisis.

More »

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