Skip to main content

Report Finds Banks Neglecting REOs in Minority Neighborhoods

NationalMortgageProfessional.com
Apr 21, 2011

Four fair housing have organizations released their joint findings after a year-long investigation  into the ways that banks secure, maintain, and market the foreclosed properties they own. “Here Comes the Bank, There Goes Our Neighborhood: How Lenders Discriminate in the Treatment of Foreclosed Homes,” reports the results of an investigation of 624 real estate-owned (REO) and distressed properties located in Washington, D.C.’s Maryland suburbs; Dayton, Ohio; New Haven and Hartford, Conn.; and Richmond, Va. The investigation found that banks are discriminating in the treatment of their properties, as they generally take greater care to maintain and secure the properties that they own in white neighborhoods than they do in African-American neighborhoods. The National Fair Housing Alliance (NFHA) in Washington, D.C. and three of its member organizations—the Miami Valley Fair Housing Center in Dayton, Ohio; the Connecticut Fair Housing Center in Hartford, Conn.; and Housing Opportunities Made Equal in Richmond, Va.—evaluated the maintenance of REOs in their local area on a 100-point scale, subtracting points when properties were poorly maintained or created an eye sore with poor curb appeal. Although many properties in pre-dominantly White neighborhoods received passing grades and had well-maintained and trash-free lawns, secured entrances and generally nice upkeep, the properties in minority neighborhoods were more likely to receive below average or failing grades due to cracked foundations, leaky roofs and “warning” signs out front. “In the aftermath of the foreclosure crisis, we are again seeing banks behave in a way that raises civil rights concerns,” said Shanna L. Smith, NFHA president and chief executive officer. “By failing to maintain properties in African-American neighborhoods in the same way that they maintain similar properties in white neighborhoods, banks are undervaluing properties and helping to stall economic recovery in our nation’s neighborhoods of color. Banks that own foreclosed homeshave a fiduciary duty to their investors to secure a fair price for the homes, and they have an obligation to neighborhoods and communities to maintain those homes. Following best practices will help stabilize property values, encourage community reinvestment and increase the local tax base at a crucial time in our economic recovery.” The groups contend that banks risk violating the Fair Housing Act when they fail to maintain REOs in African-American and Latino neighborhoods, as they must provide these services without regard to the race or national origin of residents living in the areas in which the properties are located. The Fair Housing Act makes it illegal to discriminate based on race, color, national origin, religion, sex, disability or familial status. This law applies to housing and housing-related activities, which include the maintenance, appraisal, listing, marketing and selling of homes. “Here Comes the Bank, There Goes Our Neighborhood: How Lenders Discriminate in the Treatment of Foreclosed Homes” concludes with several recommendations: ►Banks must take affirmative steps to maintain, market, and sell all properties they own, according to fair housing best practice standards; ►Federal regulators and enforcement agencies must examine the ways in which banks and the vendors that they hire conduct this business; and ►Local municipalities and residents must remain vigilant to ensure that the concentration of bank-owned properties is not impeding fair housing choice.
Published
Apr 21, 2011
PenFed CU Sees Record Annual Mortgage Lending Volume

PenFed Credit Union announced it's financial highlights from 2021 which includes record annual mortgage lending volume.

Industry News
Jan 21, 2022
Angel Oak Lending Platform Reveals Record-Setting 2021

Last year was a record-setting year for many companies in the mortgage lending space, especially for the Angel Oak lending platform that consists of Angel Oak Mortgage Solutions and Angel Oak Home Loans.

Non-QM
Jan 21, 2022
What Are The Biggest Deal-Breakers For Homebuyers?

The housing market is holding strong but that doesn't mean homebuyers don't have their fair share of deal-breakers when it comes to purchasing a home.

Analysis and Data
Jan 20, 2022
Popular Bank Names National Director Of Residential Lending

Popular Bank named Adam Dejak as its national director of residential lending for Popular Mortgage.

Industry News
Jan 20, 2022
Total Expert Appoints Gaydos As President

Former Talkdesk and SAP senior executive brings extensive cloud, go-to-market, sales, and operations experience.

Industry News
Jan 20, 2022
Sagent Appoints Thompson As Chief Product Officer

Founder of fintech managment consulting firm Consigliera will lead and expand product development.

Industry News
Jan 20, 2022