Banks Neglect REO Homes in Minority Areas, Study Says
After the housing meltdown, banks have repeatedly come under fire for allegedly using discriminatory lending practices against minorities. A study from the Center for Responsible Lending found that blacks and Hispanics with credit scores above 660 received subprime mortgages three times as often as whites with the same rating. And allegations that Countrywide charged 200,000 minority borrowers higher rates and fees than whites led to a historic $335 million discrimination settlement between its parent company, Bank of America, and the Justice Department. Now a study of more than 1,000 foreclosed properties suggests that lenders are much more concerned with the upkeep of their homes set in affluent, predominantly white neighborhoods than those in more diverse ones.
"REO properties in communities of color generally appeared vacant, abandoned, blighted and unappealing to real estate agents who might market the unit to homebuyers," the report from the National Fair Housing Alliance says. "On the other hand, REOs in white communities generally appeared inhabited, well-maintained and attractive to real estate agents and homebuyers."
The NFHA study, "The Banks Are Back -- Our Neighborhoods Are Not," has led the civil rights organization to bring a discrimination suit against Wells Fargo, and the alliance filed a complaint against the bank with the U.S. Department of Housing and Urban Development on April 10.
Examining over 1,000 bank-owned properties, also known as "REO properties," the nonprofit's study looked at a wide array of maintenance and marketing indicators, "including curb appeal, structure, signage, indications of water damage, and condition of paint, siding and gutters," to draw conclusions about maintenance standards.
In the wake of the housing bust, millions of Americans have lost their homes to foreclosure, resulting in a glut of bank-owned homes on the market. And aside from those owned by the banks, U.S. taxpayers reportedly are responsible for about 200,000 vacant homes by proxy -- because of the bailout of Fannie Mae and Freddie Mac. Those government sponsored enterprises will spend more than $40 million just to mow the lawns of these properties over the next year, Yahoo! News says.
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