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U.S. Bank Accused of Racial Discrimination and Neglecting REO Properties

NationalMortgageProfessional.com
Oct 08, 2014

The National Fair Housing Alliance (NFHA) and three of its member organizations have announced new evidence of housing discrimination by Minneapolis-based U.S. BankThe civil rights groups allege that U.S. Bank failed to maintain and market real estate-owned (REO) foreclosures in African-American and Latino neighborhoods to the same standard as in White neighborhoods, a practice that violates the federal Fair Housing Act.

The complaint was initially filed with the U.S. Department of Housing & Urban Development (HUD) in October 2012. Evidence gathered from 2010 through September 2014 documents an ongoing pattern and practice of discrimination by U.S. Bank. New evidence of discrimination continues to emerge, so NFHA and its partners are amending the original complaint for the third time. Currently, NFHA and its partners have investigated 489 REOs owned by U.S. Bank in 41 cities across the United States.

“U.S. Bank has made a practice of not maintaining its foreclosures in neighborhoods of color,” said Shanna L. Smith, president and CEO of NFHA. “The foreclosure crisis hit these middle- and working-class communities hardest, and what we’re seeing now is an illegal pattern of neglect that lowers property values, creates safety and health risks for neighbors, and contributes to community blight.  City governments and people living next to U.S. Bank foreclosures simply ask that the bank conduct routine maintenance, such as keeping the grass cut, securing windows and doors, and clearing debris and trash from the lawn and porch. U.S. Bank must be held accountable for its discrimination and adhere to basic standards of maintenance in every neighborhood.”

The fair housing organizations investigated the maintenance and marketing of bank-owned foreclosed homes for 39 different types of deficiencies, including broken windows and doors, broken and obstructed gutters and downspouts, accumulated trash, overgrown lawns and shrubs, no “for sale” signs, and other issues that affect curb appeal, the security of the home, and the value of the property.

This third amended complaint adds data from investigations in Denver, Colo.; Greater Palm Beaches, Fla.; Minneapolis, Minn.; and Orlando, Fla. The overall complaint encompasses neighborhoods in 19 metro regions. The three organizations joining NFHA in submitting new evidence of discrimination are Fair HousingCenter of the Greater Palm Beaches (Palm Beaches), Denver MetroFair Housing Center (Denver), and Fair Housing Continuum, Inc. (Orlando).

“U.S. Bank is liable for the differences in treatment between white neighborhoods and Latino and African American neighborhoods," said Smith. "U.S. Bank likes to say that it is simply the trustee for the homes and not the servicer, but U.S. Bank knows the Fair Housing Act makes owners, even trustees, accountable under the law."

The groups found that U.S. Bank properties in communities of color had excessive trash, unsecured doors and windows, overflowing mail, and overgrown lawns, while most U.S. Bank properties in predominantly white communities did not. These problems require simple fixes and are the responsibility of the bank and its contractors.

The Fair Housing Act makes it illegal to discriminate based on race, color, national origin, religion, sex, disability, or familial status, as well as on the race or national origin of residents of a neighborhood.  This law applies to housing and housing-related activities, which include the maintenance, appraisal, listing, marketing, and selling of homes.

Denver, Colo.
REO properties in communities of color were 2.6 times more likely to have overgrown or dead shrubbery on the premises compared to REO properties in White communities (21.4 percent of REO properties in communities of color had overgrown or dead shrubbery while only 8.3 percent of REO properties in predominantly White communities had the same deficiency).

►REO properties in communities of color were 3.4 times more likely to have broken or boarded windows compared to REO properties in White communities (28.6% of REO properties in communities of color had broken or boarded windows while only 8.3% of REO properties in predominantly White communities had the same problem).

Greater Palm Beaches, Fla.
Fifty percent of REO properties in communities of color had more than 10 maintenance or marketing deficiencies while none of the REO properties in White communities had more than 10 deficiencies.  

►Fifty percent of REO properties in communities of color had broken or boarded windows while none of the REO properties in predominantly White communities had the same problem.

Minneapolis, Minn.
REO properties in communities of color were 4.4 times more likely to have an unsecured, broken, or boarded doorcompared to REO properties in White communities (44.4 percent of REO properties in communities of color had an unsecured, broken, or boarded door while only 10 percent of REO properties in predominantly White communities had the same problem).

►REO properties in communities of color were 2.8 times more likely to have holes in the structure of the property compared to REO properties in White communities (27.8 percent of REO properties in communities of color had holes in the structure while only 10 percent of REO properties in predominantly White communities had the same problem).

Orlando, Fla.
REO properties in communities of color were 1.7 times more likely than REO properties in White communities to have 15 or more maintenance or marketing deficiencies (50 percent of REO properties in communities of color had 15 or more maintenance or marketing deficiencies, while only 30 percent of REO properties in predominantly White communities had 15 or more maintenance or marketing deficiencies).

►REO properties in communities of color were 1.6 times more likely to have broken or boarded windows compared to REO properties in White communities (65 percent of REO properties in communities of color had broken or boarded windows, while only 40 percent of REO properties in predominantly White communities had the same problem).

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