MVFHC and NFHA file discrimination complaint against U.S. Bank

Fair housing organizations allege discrimination in marketing and maintenance of foreclosed properties

April 17, 2012 — The Miami Valley Fair Housing Center (MVFHC) and its partners, the National Fair Housing Alliance (NFHA) and three other NFHA member agencies, filed a federal housing discrimination complaint against U.S. Bancorp and U.S. Bank National Bank Association. The complaint, filed with the U.S. Department of Housing and Urban Development, is the result of an undercover investigation of U.S. Bank's bank-owned properties, finding that its foreclosed properties in white areas are much better maintained and marketed than its properties in African-American and Latino neighborhoods.

U.S. Bank is the fifth largest commercial bank in the United States. The investigation of 177 foreclosed properties owned by U.S. Bank demonstrates that 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) 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 properties in greater Dayton as well as in the metropolitan areas of Atlanta, GA; Chicago, IL; Baltimore, MD; Miami and Fort Lauderdale, FL; Oakland/Richmond/Concord, CA; and Washington, DC.

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

MVFHC, NFHA and three other NFHA member agencies—Housing Opportunities Project for Excellence in Miami, FL; Metro Fair Housing Services in Atlanta, GA; and HOPE Fair Housing Center in Wheaton, IL—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, lack of “for sale” signs, trash on the properties, and other deficits.

“We are simply asking U.S. Bank to do routine maintenance and marketing of their REO properties in Dayton,” said Jim McCarthy, MVFHC’s President and CEO. “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.”

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 eyesores in Atlanta’s neighborhoods and should be an embarrassment for U.S. Bank,” said Gail Williams, Executive Director of Metro Fair Housing Services in Atlanta. “Atlanta’s neighborhoods are being victimized over and over again by the big banks—first with predatory loans, then by the denial of loan modifications through the foreclosure crisis, and now with poorly maintained REO properties.”

Without a “for sale” sign, for example, potential homebuyers driving in the neighborhoods would simply not know a 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 who to contact to visit the home, and 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 “for sale” signs, while in Chicago and the Bay Area 68 percent and 64 percent of all properties in communities of color had the same deficiency.

Trash on the property is a health and safety hazard and makes a home unappealing—but this is an easy problem to fix and should be addressed immediately. About three-fourths of U.S. Bank properties in communities of color in Atlanta, Baltimore, and Washington DC had substantial amounts of trash.

“Chicago is a city of neighborhoods with more than 77 defined communities and over 200 neighborhoods. Each of these communities deserves to be treated equally by banks in the marketing and maintenance of REO properties,&dquo; said Anne Houghtaling, Executive Director of HOPE Fair Housing Center in Wheaton, IL. “Evidence in this complaint demonstrates that U.S. Bank does not treat properties fairly if they are located in communities of color.”

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 offers disturbing evidence that the same banks that peddled unsustainable loans to communities of color an triggered the current foreclosure crisis are now exacerbating damage to these communities. It details the results of the evaluation of more than 1,000 REO properties nationwide.

Last week, NFHA filed a HUD administrative complaint against Wells Fargo. MVFHC, NFHA and their partners will continue their investigation into the practices of REO maintenance and marketing in the nation’s banking system.

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