Civil Rights Organizations Uncover Discrimination by Banks in Treatment of Foreclosed Properties

WASHINGTON, April 4, 2012 /PRNewswire-USNewswire/ -- Today, the National Fair Housing Alliance (NFHA) and four of its local member organizations announced the results of an undercover investigation into the ways the nation's financial institutions are failing to maintain and market Real Estate Owned (REO) properties in African-American and Latino neighborhoods.  The investigation of REO properties in nine major U.S. cities found striking incidents of discrimination in the care and maintenance of properties, with foreclosed properties in White areas being much better maintained and marketed than those in neighborhoods of color. 

A report of the investigation, "The Banks Are Back, Our Neighborhoods Are Not: Discrimination in the Maintenance and Marketing of REO Properties," was released today.  It details the results of the evaluation of more than 1,000 REO properties located in and around Atlanta, GA; Baltimore, MD; Dallas, TX; Dayton, OH; Miami/Fort Lauderdale, FL; Oakland/Richmond/Concord, CA; Philadelphia, PA; Phoenix, AZ; and Washington, DC. 

"This report offers evidence that banks responsible for peddling unsustainable loans to communities of color and triggering our current foreclosure crisis are continuing to damage those communities by failing to properly maintain and market the properties they own," said Shanna L. Smith, President and CEO of the National Fair Housing Alliance. 

"This is an investigation – not a study –- that will culminate in the filing of administrative complaints with HUD and/or lawsuits in federal district court," continued Smith.  "The first complaint will be filed shortly."

The National Fair Housing Alliance in Washington, D.C., and four of its member organizations – the Miami Valley Fair Housing Center in Dayton, OH; Housing Opportunities Project for Excellence in Miami, FL; Metro Fair Housing Services in Atlanta, GA; and North Texas Fair Housing Center in Dallas, TX – evaluated the maintenance and marketing of REO properties on a 100-point scale, subtracting points for broken windows and doors, water damage, overgrown lawns, no "for sale" sign, trash on the property, and other deficits.

The evaluations took into account 39 different aspects of the maintenance and marketing of each property.  Overall, REO properties in communities of color were 42 percent more likely to have more than 15 maintenance problems than properties in White neighborhoods.

Some trends the investigation revealed include:

• REO properties in communities of color were 82 percent more likely than REO properties in White communities to have broken or boarded windows;
• REO properties in White neighborhoods were 32 percent more likely to be marketed with the proper signage than African-American neighborhoods and 38 percent more likely than in Latino neighborhoods; and
• Newer homes generally scored higher than older homes, but racial and ethnic disparities persisted with non-structural factors such as curb appeal and signage.

"We hope that banks will heed the information in this report and take immediate action to correct the disparate treatment we have found," continued Smith.  "The proper maintenance and marketing of REO properties is a key factor in the sale of homes to families rather than to investors."  The report contains details specific to each city and gives extensive recommendations on how to fix these problems.

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.

To read the full report, please go to www.nationalfairhousing.org.

The National Fair Housing Alliance (www.nationalfairhousing.org)
Founded in 1988, the National Fair Housing Alliance is a consortium of more than 220 private, non-profit fair housing organizations, state and local civil rights agencies, and individuals from throughout the United States.  Headquartered in Washington, D.C., the National Fair Housing Alliance, through comprehensive education, advocacy and enforcement programs, provides equal access to apartments, houses, mortgage loans and insurance policies for all residents in the nation.

Housing Opportunities Project for Excellence (www.hopefhc.com)
Housing Opportunities Project for Excellence, Inc. (HOPE) was established in 1988 as the first non-profit fair housing agency in the state of Florida.  Today, it is the only private, non-profit, full-service fair housing organization in the Miami-Dade and Broward markets.   It provides one-of-a-kind education services to the community-at-large, housing providers, lenders and advertisers of housing opportunities. 

Metro Fair Housing Services, Inc. (www.metrofairhousing.com)
Metro Fair Housing Services, Inc. is a 38-year-old, non-profit civil rights organization whose primary objective is to fight housing discrimination in metropolitan Atlanta and promote equal housing opportunities throughout the state of Georgia.  The agency's mission is to promote social justice and eliminate housing and lending inequities for all people through leadership, education and outreach, public policy advocacy and enforcement of federal and state Fair Housing laws.  In the wake of the foreclosure crisis, Metro expanded its homebuyer education services to include foreclosure prevention counseling. 

The Miami Valley Fair Housing Center (www.mvfairhousing.com)
The Miami Valley Fair Housing Center is a comprehensive full-service fair housing center in Dayton, Ohio, with experience in auditing and testing activities, anti-predatory lending investigation and remedy, mortgage rescue scam intervention, foreclosure prevention counseling, mortgage modifications as well as fair housing and fair lending education and outreach.  MVFHC works throughout the Miami Valley to eliminate housing discrimination and ensure equal housing opportunity for all people in its region.

North Texas Fair Housing Center (www.northtexasfairhousing.org)
The mission of the North Texas Fair Housing Center (NTFHC) is to eliminate housing discrimination in the North Texas region.  NTFHC serves the counties of:  Collin, Dallas, Delta, Denton, Ellis, Hunt, Johnson, Kaufman, Parker, Tarrant, Rockwall and Wise.  Our services include: investigation of housing discrimination complaints; housing rights counseling; and outreach and education.

SOURCE National Fair Housing Alliance