MVFHC and partner agencies find that banks discriminate in their treatment of foreclosed properties

Investigation reveals that banks’ record for maintaining properties in African-American and Latino neighborhoods is worse than in white neighborhoods

Download the report (PDF format)

April 11, 2011 — The Miami Valley Fair Housing Center (MVFHC) and its partners, the National Fair Housing Alliance (NFHA) and two other NFHA member agencies, released the findings of a year-long investigation into the ways that banks secure, maintain, and market the foreclosed properties they own, finding that banks are discriminating in the treatment of their properties.

The report, entitled, “Here Comes the Bank, There Goes Our Neighborhood: How Lenders Discriminate in the Treatment of Foreclosed Homes,” details the results of an investigation of 624 bank-owned properties in the greater Dayton area as well as in Washington, DC’s Maryland suburbs, New Haven and Hartford, CT, and Richmond, VA. The investigation found that banks generally take greater care to maintain and secure the properties they own in white neighborhoods than they do in African-American and Latino neighborhoods.

An “F” property in Dayton

This vacant bank-owned property on Deeds Avenue was a target of arson some time before MVFHC’s investigators first visited it in September 2010. One of the posted notices on the property shows that the Dayton building inspector issued an order on August 31, 2010, to repair or demolish. The mortgage holder, Wells Fargo, was given 30 days to comply to appeal. The photographs below show its condition monthly, illustrating that there has been absolutely no change to date:

“The pattern of neglect of bank-owned foreclosed properties in the Miami Valley is unmistakable,” said Jim McCarthy, MVFHC’s President and CEO. “The negligence of lenders in maintaining these properties not only devalues the private investment of neighboring properties but also jeopardizes thousands, and in some cases millions, of dollars of public money—Community Development Block Grant and HOME dollars—that have been invested by the City of Dayton and Montgomery County in attempts to stabilize neighborhoods that not only have been historically redlined but also have been grossly under-served by the lending industry.”

MVFHC, NFHA, the Connecticut Fair Housing Center and Housing Opportunities Made Equal of Virginia evaluated the maintenance of bank-owned homes in their areas on a 100-point scale, subtracting points when properties were poorly maintained or created eye sores with poor curb appeal.

Although many properties in white neighborhoods received passing grades and had well-maintained and trash-free lawns, secured entrances and generally nice upkeep, properties in African American neighborhoods were more likely to receive below average or failing grades due to cracked foundations, leaky roofs, and warning signs out front.

MVFHC and its partners contend that banks risk violating the Fair Housing Act when they fail to maintain bank-owned homes in African American and Latino neighboods, as they must provide these services without regard to the race or national origin of residents living in the areas in which the properties are located. The Fair Housing Act makes it illegal to discriminate based on race, color, national origin, religion, sex, disability or familial status. This law applies to housing and housing-related activities, including the maintenance, appraisal, listing, marketing and selling of homes.

The report, available for download in PDF format, outlines the steps that MVFHC and its partners took in their investigation, what they found, and recommendations as to how banks, federal and local governments, and residents can begin to address the situation.

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