Following an undercover investigation of foreclosed single-family homes in eight metropolitan areas, the National Fair Housing Alliance (NFHA) filed two discrimination complaints with the Department of Housing and Urban Development (HUD). The complaints allege that in handling foreclosed properties in its possession, US Bank and Wells Fargo show distinct and systematic differences in maintenance and marketing of these homes. And once again, Black neighborhoods are getting short shrift.
The investigation involved foreclosed homes in Atlanta, Baltimore, Dallas, Dayton, Miami/Fort Lauderdale, Philadelphia, Oakland and Washington, D.C.
NFHA found that while properties in predominantly White areas were consistently well-maintained with signage indicating the homes were available for sale, foreclosed homes in minority communities typically had multiple maintenance and marketing deficiencies such as substantial amounts of trash, overgrown grass and shrubs, broken doors or locks, peeling or chipped paint and holes in the structures. In Atlanta, Baltimore and Washington, D.C., nearly 75 percent of foreclosed homes held by US Bank in minority neighborhoods had substantial amounts of trash.
The availability of “for sale” signs on homes in these eight markets also revealed a racial divide. Signage is significant because it represents a marketing tool and contact information for neighbors who could want to report any problems with the property.
In both Philadelphia and Oakland, NFHA found almost twice as many for sale signs in White communities than in Black or Latino communities. In Dayton, 90 percent of Wells Fargo properties and 94 percent of all US Bank properties located in minority areas had no signage at all. In Washington, D.C., Wells Fargo had four times as many for sale signs in White neighborhoods than in neighborhoods of color.
These new allegations mirror broader research findings by the Center for Responsible Lending:
• Racial and ethnic differences in foreclosure rates persist even after accounting for differences in borrower incomes. Among borrowers with a FICO score of higher than 660 (indicating good credit), African-Americans and Latinos received a high interest rate loan more than three times as often as White borrowers.
• African-Americans and Latinos were much more likely to receive high interest rate (subprime) loans and loans with features that are associated with higher foreclosures, specifically prepayment penalties and hybrid or option adjustable-rate mortgages.
• Between 2004 and 2008, African-American families were almost twice as likely to have been impacted by the crisis. As of February 2011, approximately one-quarter of all African-American borrowers had either lost their home to foreclosure or were seriously delinquent, compared to less than 12 percent for White borrowers.
These findings are also mirrored in a series of settlements negotiated by the Justice Department’s Civil Rights Division. In 2011 alone, the division filed a record eight lending-related federal law suits, and obtained eight settlements providing for more than $350 million in relief to the victims of illegal lending practices. This figure includes the settlement with Countrywide Financial Corporation, the largest lending discrimination case ever brought by the Department of Justice, as well as a record settlement under the Service Members Civil Relief Act.
In the approximately two years since this administrative adjustment, the division has filed or resolved 16 lending matters. By contrast, from 1993 to 2008, the department filed or resolved 37 lending matters, an average of a little more than two cases per year. In other words, four times as many cases are now being pursued.
Fair housing may have been the law for 44 years; but its letter and spirit have yet to be fully embraced. Ironically, the theme for the 2012 national observance of the law is “Live Free.” Too bad we are not doing that yet.
Charlene Crowell is the Communications Manager for State Policy & Outreach with the Center for Responsible Lending.