Report | THE BANKS ARE BACK OUR NEIGHBORHOODS ARE NOT – Discrimination in the Maintenance and Marketing of REO Properties

THE BANKS ARE BACK – OUR NEIGHBORHOODS ARE NOT Discrimination in the Maintenance and Marketing of REO Properties

EXECUTIVE SUMMARY

As the foreclosure crisis continues to affect 1 in 69 households across the United States, or roughly 2.7 million families in 2011, banks are repossessing an unprecedented number of properties.1 As a result, a related crisis has emerged — one in which vacant and poorly maintained bank-owned properties mar once vibrant, well-maintained neighborhoods. But this problem has not affected all neighborhoods equally. This report documents an alarming pattern by many of the banks, lenders, investors and other entities that manage Real Estate Owned (REO) assets. They have engaged in substandard maintenance of REO properties in communities of color, while maintaining REO properties in predominantly white communities in a superior manner.

Proper REO maintenance is a key factor in both the marketability and value of a home as well as the sustainability and viability of communities. Poor maintenance practices can result in a property remaining vacant for longer periods of time. Poor maintenance also increases the likelihood that a property will be purchased by an investor at a discounted price, rather than by an owner-occupant, because of the cost to rehabilitate the home. Thus, the inferior way in which banks2 maintain and market their REO properties in communities of color actually changes the character of and serves to degrade the quality of life in these neighborhoods.

The National Fair Housing Alliance (NFHA) conducted an examination of REO maintenance and marketing practices of several major lenders and investors in targeted neighborhoods in nine metropolitan areas. NFHA and its partners evaluated more than 1,000 REO properties in neighborhoods with predominantly Latino and African-American residents, as well as those with a majority of White residents. The evaluations took into account 39 different aspects of the maintenance and marketing of each property, including curb appeal, structure, signage, indications of water damage, and condition of paint, siding and gutters. NFHA’s partners in this investigation included the Miami Valley Fair Housing Center in Dayton, Ohio; Housing Opportunities Project for Excellence (HOPE) working in Miami-Dade and Broward Counties, Florida; Metro Fair Housing of Atlanta in Atlanta, Georgia; and North Texas Fair Housing Center in Dallas, Texas, serving the greater Dallas/Fort Worth area.

The findings of the investigation revealed extremely troubling disparities in maintenance and marketing practices. REO homes in White neighborhoods were cared for in a substantially better manner than those in communities of color. While REO properties in predominantly White neighborhoods were more likely to have neatly manicured lawns, securely locked doors, and attractive “for sale” signs out front, homes in communities of color were more likely to have overgrown yards littered with trash, unsecured doors, broken windows, and indications of marketing as a distressed sale. REO properties in communities of color generally appeared vacant, abandoned, blighted and unappealing to real estate agents who might market the unit to homebuyers. On the other hand, REOs in White communities generally appeared inhabited, well-maintained and attractive to real estate agents and homebuyers.

The findings included significant differences, such as:

• REOs in communities of color were 42 percent more likely to have more than 15 maintenance problems than properties in White communities.

• Trash and debris were 34 percent more likely to be found on REO properties located in communities of color than on REO properties in White neighborhoods.

• REO properties in communities of color were 82 percent more likely than REO properties in White communities to have broken or boarded windows.

• REO properties in predominantly White neighborhoods were 33 percent more likely to be marketed with a professional “For Sale” sign than their counterparts in African-American or Latino communities.

• In the Washington, DC, metropolitan area nearly 60 percent of REO homes in African-American neighborhoods had broken or boarded windows, while the same was true for only 39 percent of REO properties in predominantly White areas.

• In the Baltimore, MD, metropolitan area, 43 percent of REO properties in African-American neighborhoods had boarded up windows, while this only occurred in 28 percent of homes evaluated in predominantly White neighborhoods.

• In Philadelphia, PA, more than 10 distinct maintenance or marketing problems were documented in 41 percent of homes in African-American communities, while none of the properties in White communities had more than 10 maintenance or marketing problems.

• In Phoenix, AZ, 73 percent of REO properties evaluated in Latino neighborhoods were missing a “For Sale” sign, while only 31 percent of homes in predominantly White neighborhoods were missing a “For Sale” sign.

• In Oakland, Richmond, and Concord, CA, REOs in the African-American communities were 3.45 times more likely to be missing a “For Sale” sign than their white counterparts.

• In Dayton, OH, 60 percent of homes in African-American communities had broken or unsecured doors, while only 18 percent of homes in white communities had this problem.

• In Miami, FL, 46 percent of REO homes in African-American communities had boarded or broken windows while the same was true for only 16 percent of REO properties in White communities.

• In Dallas, TX, 60 percent of REOs in African-American neighborhoods, 68 percent of REOs in Latino neighborhoods, and 73 percent of REOs in communities with a majority of residents of color had substantial amounts of trash on their properties, while only 37 percent of communities in White areas had the same problem.

•In Atlanta, GA, 32 percent of REOs in African-American communities had more than 10 deficits, while not a single property in a White area was subject to such poor maintenance.

The federal Fair Housing Act requires banks, investors, servicers or any other responsible party to maintain and market properties that are for sale or rent without regard to the race or national origin of the residents of a neighborhood. It is illegal to treat a neighborhood differently because of the race or national origin of the residents. Moreover, these laws obligate banks, investors and servicers to monitor the actions of vendors engaged to perform housing-related transactions to ensure that those third party entities are complying with fair housing laws and regulations.

Banks, federal regulators, local communities and law enforcement must work together to ensure that these sorts of discriminatory practices are stopped as the foreclosure crisis continues in the coming years. Banks must completely restructure their maintenance and marketing models to ensure equal treatment of REO properties in all neighborhoods so that all communities have a fair opportunity to recover and prosper.

Full report below…

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4closureFraud.org

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THE BANKS ARE BACK OUR NEIGHBORHOODS ARE NOT – Discrimination in the Maintenance and Marketing of REO Properties

Comments
7 Responses to “Report | THE BANKS ARE BACK OUR NEIGHBORHOODS ARE NOT – Discrimination in the Maintenance and Marketing of REO Properties”
  1. That is because the banks got bail out the neighborhoods didn’t !

  2. jw says:

    Attorney Mark Stopa pretty well summed it up with this:

    ‘This is the problem, folks. There was no downside for these banks when they gave out these loans during the real estate boom. If the borrower pays the loan, the bank collects interest on a performing note. If the borrower doesn’t pay, then the U.S. government pays back the bank, in full (to include default interest at 18% and all of the other bogus charges the banks build into a foreclosure judgment). The system is so perverse, with such obvious incentives to foreclose, is it that surprising to see the banks do what they do?’

    Ergo, why should the banks give a damn about the conditions of the property or the neighborhood?

  3. keepon says:

    Ed DeMarco, head of the Federal Housing Finance Agency — which oversees Fannie and Freddie — has stood in the way of (principal) reductions and he’s claimed the support of Fannie and Freddie. But that’s no longer the case. Even Fannie and Freddie now support principal reductions. It’s time for Ed DeMarco to step aside by signing this Whte House petition:

    https://wwws.whitehouse.gov/petitions/!/petition/push-fannie-mae-and-freddie-mac-issue-principal-reductions-underwater-homeowners/qtS3crg7

    “Senator Demands Answers from Freddie Mac’s Regulator” ( Acting Director Edward DeMarco)
    http://www.propublica.org/article/senator-demands-answers-from-freddie-macs-regulator

    ProPublica and NPR reported on Monday [1] that Freddie Mac, the taxpayer-owned mortgage-insurance company, placed multibillion-dollar bets that pay off if homeowners stay trapped in expensive mortgages with interest rates well above current rates.

    Questions the senator put to the regulator, the Federal Housing Finance Agency, include why Freddie made the deals in the first place, when the FHFA learned of the trades, what role, if any, the FHFA played in them, and what the FHFA plans to do about the billions of dollars worth of deals Freddie still has on its books.

  4. Ali says:

    This has been going on for 6 years in my neighborhood, yet I have heard not a peep from any of my neighbor’s. I can tell you this, people are not as freindly as they were, people are coming and going, mostly going. The empty properties are being stripped and littered with garbage because the bank owned properties are not being maintained. I walk the neiborhood with my dogs and I check everything out. It’s in the air, the distrust, the seniors, the young couples with little children, it just feels like an atmosphere of fear and distrust. There is a foreclosure on my block on the other end where there was a young hispanic couple with a disabled child, I would see the special school bus drop him off in his wheelchair, had I known they were in distress I would have tried to help in some way. The next thing I saw was papers plastered on the front door and the women accross the street started talking to me. She told me she went and stripped all the paper off as it was an invitation to theives. I told her that wasn’t even the half of it and. She investigated and found the bank who owned it and put in a complaint, to no availe. Another man called the city inspector and told him what was going on and he told him he would take care of it and now the city inspector won’t even take his calls! This is so prevalent on the local schale including the clerks and the recorders office office who is full of MERS mortgages. I looked up the mortgage broker who scammed us and wasn’t too surpised to find that that in my zipcode there was 735 foreclosures, 40 sheriffs sales 401 preforclosures, 19 “deals” whatever that means) and they had over 735 “for sale by owners” ( of course them being the owners) I offered my services at the recorders office to help ferret out the fraud and they said “no thank you and I gave them my # and said call if you need me. I wanted to let them know that I knew. We have been left alone for the most part of it but I’m just waiting to be served. I hope I am.

  5. woodknotgo says:

    Market Manipulation-from the real estate market to Wall Street ! no enforcement.
    CSPAN.org April 4th Video “Law Makers Hold Hearing On Gas Prices & Excessive Speculation”
    Almost did not watch-but so glad I did get to hear testimony that WALL STREET is causing the high price of fuels. Credit Default Swaps-CDS Insurance was even discussed and they said “Wall Street is doing the same thing to Commodities (Gas/Oil/Fuels) as they did to CRASH THE HOUSING MARKET !!! This panel is calling for immediate action……….
    check it out-on cspan.org

    • Ali says:

      This was a combination of things and no doubt in my mind about the speculators. However on the local level it seems all are complicent. In investagating my own history and chain of title to my house I found “property flipping schemes, and what the FBI calls, “Shotgunning,” ( that is when someone takes out multible loans on one property) according to my credit report that is what was done to us. In addition the previous owner took out a 24k mortgage on the property he sold us only the year before, can’t find any satisfaction of that either. I thought title insurance was for just that! I also saw that another scheme they use is “Working the gap”, that is excessive lien stacking knowingly executed on a specific property, serial recordings of notes submitted to the recorders office and when they finially show up in the data it leaves each lender believing their respective deed of trust to be senior in position. My own sig. was forged on closing papers and noterized and I know I didn’t sign, my husband quit claimed the property to me and himself later on down the road, that is recorded , on the advise of our clsing atty. who was also recommended by mtg. broker. (now Iam really scared that this advice was intended to hurt us in some way). So this is not just “robo-signing” or simple paperwork errors, these were crimes, carefully planned to to defraud. Who in the hell would dig that deep to find these things? Me, thats who. I have called every agency tring to report these things and have given up on that. So here we sit , on our zombie mtg, maintaining our property and still helping our seniors in the neighborhood with things they cannot do. My nieghbor across from the “distressed’ property wants me to talk to her friend who works for the local newspaper and explain “the MERS thing”. She tried to convince me that she would help and her friend was really interested in uncovering these things but I don’t know exactly what her agenda is and if I can trust her. Any advice?

  6. More proof that the banks live by their own rules. Not only do they get your home back, they also save money by not maintaining them. They will sell the houses to some unsuspecting future homeowner who will then be liable to fix the damages. Homeowners have to worry about the township or city knocking on their door if there are building violations, wanting money and results…the banks can afford to pay the fines (which are cheaper than fixing up deteriorating housing) and therefore, again, reap the rewards.

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