Wednesday, September 25, 2013

Groups: Bank of America discrimination involving foreclosures continues

Fair housing groups that claim Bank of America has taken better care of bank-owned homes in white neighborhoods than non-white ones added more cities to its federal complaint Wednesday.

The National Fair Housing Alliance and four of its member organizations announced that they have found evidence of discrimination in five additional cities: Denver; Las Vegas; Memphis, Tenn.; Philadelphia; and Tucson, Ariz. That brings to 18 the number of metropolitan areas in which the groups claim to have uncovered the discriminatory practices.

On Wednesday, the groups added the cities to an amended complaint first filed with the U.S. Department of Housing and Urban Development exactly a year ago. The complaint alleges violations of the federal Fair Housing Act.

In addition to claims that the bank has done a better job of maintaining homes in white communities than in predominantly black, Latino and other non-white neighborhoods, the civil rights groups said the bank has made more of an effort to market the homes in white areas. For example, in nonwhite areas the bank is less likely to put a for-sale sign in the yard, the groups say.

The groups also said Wednesday that they have found fresh discrimination in four metro areas mentioned in their original complaint. Those four areas are Atlanta; Dayton, Ohio; Miami; and Washington, D.C. The evidence has been turned over to HUD, the groups said.

Dan Frahm, Bank of America spokesman, denied the groups' allegations.

"Bank of America applies uniform practices to our management and marketing of bank-owned properties regardless of their location," he said. "The NFHA's suggestions to the contrary are just untrue."

Frahm said Bank of America is looking at the homes the civil rights groups have taken issue with "to find out whether we even have responsibility for those properties and, if so, what their status is."

When the groups first made their claims last year, there were "numerous" flaws in their methodology, he said.

"Examples of that would be the majority of the properties that they faulted us for a year ago were the responsibility of other entities to maintain and market, not Bank of America," he said.

The groups also didn't disclose the condition that properties were in right before Bank of America took ownership of them, he said. "They also included properties that we had already reached agreements with organizations, including local charitable organizations, to whom we would donate properties."

The bank's alleged practices involving REO, or real estate-owned, properties began at least in 2011 but continue to this day, the groups say. All told, Bank of America's discriminatory practices have been found in roughly 40 cities, according to the alliance.

In an online presentation to reporters Wednesday, the alliance showed what it said were recent photos of homes Bank of America-owned homes. A home said to be in Denver, and supposedly photographed in August, had unlocked doors and a vandalized kitchen and broken windows.

"The new evidence we have shows a continuing pattern of discriminatory maintenance and marketing by Bank of America," Shanna Smith, president of the alliance, told reporters. "The quality control of their areas in white neighborhoods is excellent. It's very hard to find a bad REO in a middle-class, working-class white neighborhood."

The alliance said Wednesday that it plans to add even more cities to its complaint against Bank of America in coming weeks.

Last year, the alliance filed complaints against the Charlotte-based bank and two other lenders, San Francisco-based Wells Fargo and Minneapolis-based U.S. Bancorp.

In June, Wells Fargo agreed to pay $30 million to the alliance and 13 fair housing groups and $11.5 million to HUD. But the complaints against U.S. Bancorp and Bank of America are ongoing, the alliance said.

Frahm said the bank has been cooperating with HUD "with any information that they've been looking for from us."

U.S. Bancorp spokeswoman Nicole Garrison-Sprenger said in an email that the "vast majority" of the properties the alliance have called attention to are not serviced by the company, which is the parent of U.S. Bank.

U.S. Bank, she said, is a trustee for investment pools where securitized mortgages are held. As trustee, the bank is not responsible for maintaining the properties, she said, adding that that's a servicer's role.

"When we do own a property, we have a strong and comprehensive process in place to regularly inspect and maintain properties to marketing standards where we have legal access, regardless of their location," she said.

Smith, the alliance's president, said the organization started looking at how banks were maintaining bank-owned properties in 2009. The alliance has met with Bank of America to discuss its concerns, she said, adding that the bank has not fixed the problems, she said.

"They were all talk and no show," she said.

Frahm, the Bank of America spokesman, pointed out that it's in the best interest for the bank, the owners and the neighborhoods for the homes to be sold, rather than allowed to just sit on the market.

"We have worked hard to transition properties to new owners, and our real estate-owned inventory has dropped by almost 70 percent in the past year," he said.


Anonymous said...

The real question is whether the maintenance was in keeping with "community standards" or not.

Some "communities" are just more run down than others.

That's a fact.

Anonymous said...

"It's very hard to find a bad REO in a middle-class, working-class white neighborhood."

Well, DUH!

Why do you think people prefer neighborhoods like that?

Anonymous said...
This comment has been removed by a blog administrator.
Anonymous said...

And one from an obvious non-investor...