The National Fair Housing Alliance (NFHA) and five of its member organizations around the country announced a federal housing discrimination complaint against Bank of America Corporation, Bank of America, N.A., and BAC Home Loan Servicing, LP. This complaint, which was filed earlier with the U.S. Department of Housing and Urban Development, is the result of an undercover investigation that found that Bank of America maintains and markets foreclosed homes in White neighborhoods in a much better manner than in African-American and Latino neighborhoods.
Bank of America is one of the largest American banks that maintains and sells foreclosed properties and is one of the world’s largest financial institutions. The investigation of 373 foreclosed homes owned, serviced or managed by Bank of America 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 properties) 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 Bank of America REO properties in the eight metropolitan areas of Dallas, TX; Atlanta, GA; Dayton, OH; Grand Rapids, MI; Miami/Fort Lauderdale, FL; Oakland/Richmond/Concord, CA; Phoenix, AZ, and metropolitan Washington, DC.
REO properties in African-American and Hispanic communities in Dallas were twice as likely as REO properties in White communities to have substantial amounts of trash in the yard, three times as likely to have overgrown grass, three times as likely to have exposed or tampered with utilities, and 4.5 times as likely to have broken doors or locks.
“Bank of America didn’t even bother to clean up the trash or mow the lawns at its Dallas homes in African American and Hispanic communities,” said Frances Espinoza, Executive Director, North Texas Fair Housing Center. “This neglect ultimately hinders the sale of these homes and leaves them to blight the entire community.”
Communities of color continue to experience foreclosure rates twice those of White communities and continue to see their REO homes left to deteriorate and sit vacant.
“Our economy may be recovering in some communities, but this is a Tale of Two Recoveries,” said Shanna L. Smith, President and CEO of the National Fair Housing Alliance in Washington, DC. “Our investigation shows that Bank of America continues to disregard its REO homes in communities of color. And they have no excuse. 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.”
The National Fair Housing Alliance in Washington, D.C., and five of its member organizations – the Miami Valley Fair Housing Center in Dayton, OH; Housing Opportunities Project for Excellence, Inc. in Miami, FL; Metro Fair Housing Services in Atlanta, GA; the Fair Housing Center of West Michigan in Grand Rapids, MI and the North Texas Fair Housing Center in Dallas, TX – evaluated REO properties for the existence of 39 different types of maintenance or marketing deficiencies, such as broken windows and doors, water damage, overgrown lawns, no “for sale” sign, trash on the property, and other problems.
“Without a ‘for sale’ sign, for example, potential homebuyers and neighbors simply don’t know the home is available,” continued Smith. “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.” In Oakland, CA, 72 percent of Bank of America REO properties in communities of color were missing a “for sale” sign, as well as 80 percent in Washington, DC and Atlanta, GA, and 86 percent in Phoenix, AZ.
Trash on a property is not only an eyesore for neighbors, but it makes a home unappealing to buyers and can be a potential health and safety hazard. Regular maintenance would correct this problem, but in Grand Rapids, MI, 97 percent of all Bank of America REO properties 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 Washington, DC.
NFHA will continue its investigation into the practices of REO maintenance and marketing in the nation’s banking system. In April, NFHA issued a report on the findings of its nationwide REO investigation of 1,000 REO homes nationwide, 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 and triggered the current foreclosure crisis are now exacerbating damage to those communities.
“Bank of America has the privilege of access to the Federal Reserve Board’s discount window to borrow at close to zero percent,” continued Smith. “Bank of America reports huge profits and yet 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.”
NFHA filed HUD administrative complaints against Wells Fargo and U.S. Bancorp in April 2012. Both of these complaints are pending while HUD investigates these serious and pervasive allegations of discrimination.
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.
- DAYTON, OH
Ninety-two percent of Bank of America-owned properties in African-American communities had more than five maintenance or marketing problems, and 58 percent had over ten maintenance or marketing problems.
“Our investigation shows that virtually nothing has been done to appropriately maintain Bank of America REOs in Dayton’s African-American neighborhoods,” said Jim McCarthy, President/CEO of the Miami Valley Fair Housing Center. “In fact, over the past 2 ½ years that we investigated how Bank of America maintained REOs in Dayton, the problem has actually gotten worse. I am disgusted by the indifference that Bank of America has shown toward its obligation to comply with federal law and not discriminate when it maintains and markets these homes.”
- GRAND RAPIDS, MI
Bank of America’s foreclosed homes in Grand Rapids’ communities of color were 17.1 times as likely as foreclosed homes in white communities to have more than 15 serious marketing or maintenance problems. Thirty-two percent of REO properties in communities of color had more than 15 deficiencies, while only two percent of REO properties in White communities had more than 15 deficiencies.
“Bank of America’s disregard for Grand Rapids’ minority neighborhoods has had a devastating impact on the property values of the homes in those neighborhoods,” said Nancy Haynes, Executive Director of the Fair Housing Center of West Michigan. “Bank of America is undermining years of thoughtful planning and community investment by the city, private investment and public dollars.”
- ATLANTA, GA
Forty percent of Bank of America’s REO properties in Atlanta’s communities of color have more than 10 maintenance or marketing problems, compared to none in White communities.
“The way Bank of America has treated its homes in Atlanta’s communities of color has led to depressed housing values and loss of wealth for the residents and the city,” said Gail Williams, Executive Director of Metro Fair Housing Services, Inc. “That’s money that could have been used to support public services like roads and police or for families to use toward their children’s education. Bank of America has done a huge disservice to Atlanta and its time for some accountability.”
- MIAMI, FL
Forty-three percent of Bank of America’s REO properties in Miami’s communities of color had broken windows compared to none in White communities.
“In South Florida, there is a definitely a tale of two recoveries in our neighborhoods,” said Keenya Robertson, President and CEO of Housing Opportunities Project for Excellence. “Almost half of the homes visited in neighborhoods of color have broken windows while no homes in White neighborhoods were found to be open or broken. The difference in treatment leads to higher crime and health concerns in ways of vandalism and increased mold risks.”