The National Fair Housing Alliance recently expanded its lawsuit against Bank of America, claiming that BofA has not been attentive in maintaining and marketing some of the REO properties they own. This new evidence provides more support that BofA has been discriminating against minority communities.
The lawsuit against BofA began in September 2012, after the National Fair Housing Alliance released a study suggesting that lenders were violating the Fair Housing Act in their handling of repossessed properties. The study included over 1,000 repossessed homes in nine major markets, concluding that the properties in white communities “generally appeared inhabited, well-maintained, and attractive to real estate agents and homebuyers,” whereas the properties in minority communities were “more likely to have overgrown yards littered with trash, unsecured doors, broken windows, and indications of marketing as a distressed sale.”
To back their most recent complaint, the NFHA investigated five new metro areas, providing evidence of these violations in 621 properties which BofA owns. The investigation also revealed that BofA’s real estate owned (REO) properties in minority communities were two times more likely to have ten or more maintenance or marketing problems than those in white communities, and 4.5 times more likely to have more than fifteen maintenance or marketing problems.
Bank of America is not the only lender who has faced accusations of discrimination recently; Wells Fargo faced a similar suit in 2012 which was finally settled this past June. In the settlement, Wells Fargo agreed to pay $42 million as well as implementing better practices for maintaining and marketing of its REO properties among other commitments.
Aside moral issues, these discriminative practices can be very harmful for the communities with these REO properties. While a trashed yard, broken doors and windows, and water damage may be off-putting to buyers – ultimately lowering the price of the property – these problems are also bringing down the value of the surrounding properties. What’s worse is that these problems have begun to discourage purchases by owner-occupants in favor of investors, turning communities into neighborhoods of absentee landlords.
Have you noticed a difference in how some lenders maintain and market their REO properties throughout different communities? What are your thoughts?
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