Bank of America latest major lender to face REO-management discrimination charges
by Broderick Perkins
(9/27/2012) - Bank of America, this week, became the third large bank to
get slapped with a federal complaint for alleged discrimination in handling
foreclosed properties, revealing a continuing pattern of discrimination that
has spanned the full housing boom-to-bust era.
The National Fair Housing Alliance's (NFHA) complaint
(joined by a host of member agencies around the nation), filed the U.S.
Department of Housing and Urban Development (HUD), stems from a scathing
undercover report "The Banks Are Back - Our
Neighborhoods Are Not."
The report includes a litany of incidents allegedly revealing that banks
take better care of REOs (real estate owned or repossessed properties) in
white neighborhoods than REOs in minority neighborhoods.
The investigation of 373 BofA-owned or managed foreclosed homes said the
bank engaged in a "systemic practice" of poorly maintaining and marketing
REOs in racial minority communities, while doing a far better job
maintaining and marketing REO properties in predominantly white
NFHA investigators evaluated BofA properties in eight metropolitan areas
- Atlanta, GA; Dallas, TX; Dayton, OH; Grand Rapids, MI; Miami/Fort
Lauderdale, FL; Oakland/Richmond/Concord, CA; Phoenix, AZ, and metropolitan
The investigation examined properties to root out incidences of 39
different types of maintenance or marketing deficiencies, including broken
windows and doors, water damage, overgrown lawns, no for sale sign, trash on
the property, and other problems.
Shanna L. Smith, president and CEO of the NFHA said communities of color
continue to experience foreclosure rates twice those of white communities
and their communities continue to suffer a greater share of mishandled REO
NFHA said, BofA, notified of the report's findings in April,
allegedly has a history of failing to correct REO problems.
New face of redlining
"Bank of America has been on notice of its failure to maintain REOs since
the summer of 2009, yet has made no improvement in addressing racial
disparities in the maintenance and marketing of its bank-owned homes," Smith
She said in Oakland, CA, 72 percent of Bank of America REO properties in
communities of color were allegedly missing a "for sale" sign, as well as 80
percent in Washington, DC and Atlanta, GA, and 86 percent in Phoenix, AZ.
"Without a for-sale sign, for example, potential homebuyers and neighbors
simply don't know the home is available. Also, if there are unauthorized
occupants or storm damage, neighbors have no one to call. With a for sale
sign, neighbors can call a real estate agent to report these kinds of
problems," Smith said.
In Grand Rapids, MI, 97 percent of all BofA REOs in communities of color
had substantial amounts of trash, as well as 69 percent in Dallas, TX, 71
percent in Phoenix, AZ, 77 percent in Oakland, CA, and 70 percent in
Regular maintenance can correct a problem that creates neighborhood
blight, makes a home unappealing to buyers and can be a potential health
and safety hazard.
Pattern of fair housing abuses
Smith said, while BofA has access to the Federal Reserve Board's discount
window to borrow at nearly zero percent and has reported healthy profits, it
fails to renovate, maintain or properly market homes it owns in African
American and Latino neighborhoods.
"This disregard and disrespect for communities of color will not be
tolerated," she said.
NFHA's report offers evidence that the same banks that peddled unsustainable
loans to communities of color - which contributed to the current housing
crisis - also practiced abusive foreclosure tactics and are now
victimizing some people for a third time by effectively, allegedly leaving
neighborhoods to crumble under the weight of foreclosures.
This while Republicans are clamoring on election platforms to roll back
regulations that are just beginning to put a dent in mortgage lenders'
abusive practices of victimization and discrimination.
NFHA also filed HUD administrative complaints against Wells Fargo and
U.S. Bancorp in April 2012. Both complaints remain pending while HUD
DOJ cracking down
The Fair Housing Act makes it illegal to discriminate based on race,
color, national origin, religion, sex, disability or familial status, as
well as 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.
The U.S. Department of Justice's (DOJ) Civil Rights
Division website is riddled with recent discrimination complaints, suits
and settlements involving large lenders that write mortgages including:
The now defunct Countrywide Financial agreed to a $335 million
settlement, the largest fair lending settlement in DOJ history, for charging
more than 200,000 African-American and Hispanic borrowers higher fees and
interest rates than non-Hispanic white borrowers in both its retail and
Wells Fargo, in the
second largest fair lending settlement in DOJ history, agreed to $175
million in restitutions for steering approximately 4,000 African-American
and Hispanic wholesale borrowers, as well as additional retail borrowers,
into subprime mortgages when non-Hispanic white borrowers with similar
credit profiles received prime loans.
Bank of America agreed to settle allegations by the
federal government that the financial institution discriminated against
mortgage loan applicants with disabilities by asking them to provide medical
information from a doctor.
Other related articles:
Wells Fargo settles on $175 million in discrimination restitutions, exists wholesale affiliations
Fair housing group warns of federal discrimination suit against REO owners
Mortgage lenders again charged with conducting foreclosure abuse during national mortgage settlement negotiations
Foreclosure abuses continued during year-long National Mortgage Settlement negotiations
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