Sunday
December 21, 2014

Lawsuits Accuse Banks of REO Neglect in Minority Areas

|
-A A +A

Lawsuits Accuse Banks of REO Neglect in Minority Areas

The National Fair Housing Alliance has filed a second discrimination lawsuit against a bank, and said more are coming, over allegations that banks are taking better care of foreclosures in predominantly white neighborhoods than foreclosures in minority areas.

The fair housing group recently released a study that alleged REO properties in minority areas tended to appear “vacant, abandoned, blighted, and unappealing” while REOs in predominantly white areas usually appeared “inhabited, well-maintained, and attractive to real estate agents and home buyers.”

The NFHA has filed lawsuits against U.S. Bank and Wells Fargo so far, alleging discriminatory practices in the upkeep of its foreclosures. 

In its latest lawsuit against U.S. Bank, the NFHA alleges that its investigation of 177 foreclosed properties owned by the bank revealed “a systemic practice of maintaining and marketing its foreclosed, bank-owned properties in a state of disrepair in communities of color while maintaining and marketing REO properties in predominantly white communities in a far superior manner."

A U.S. Bank spokeswoman told AOL Real Estate that the bank has not received any information regarding the properties cited in the complaint. “Without knowing the addresses, it’s impossible to know the rightful owner, the servicer, or the condition of the property,” the spokeswoman said. Also, the spokeswoman noted that in many cases, the bank is merely a trustee -- not the servicer -- in the foreclosure and has “no role in servicing or maintaining that property.” 

The NFHA says more lawsuits are pending against lenders as well as asset managers and preservation companies over the maintenance of foreclosed properties in mostly minority areas. 

Source: “Fair Housing Group Sues U.S. Bank Over Foreclosures,” AOL Real Estate (April 17, 2012)

Read More

Study: Foreclosures More Neglected in Minority Areas