A fair housing group is suing a second mortgage lender, alleging that U.S. Bank takes much better care of its foreclosed properties in predominantly white neighborhoods than those in minority communities.
The National Fair Housing Alliance has filed a discrimination lawsuit against U.S. Bank, as a result of a study by the civil rights group into the way banks maintain the properties that they've foreclosed on (also known as real estate-owned or REO properties). It follows last week's NFHA lawsuit alleging the same discriminatory practice by Wells Fargo, and comes as the group reportedly is in discussions with Bank of America over the upkeep of its properties.
The NFHA said in a statement: "The investigation of 177 foreclosed properties owned by U.S. Bank demonstrates that the financial giant has engaged in 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."
Through a spokeswoman, U.S. Bank, which the NFHA says is the fifth largest commercial bank in the U.S., told AOL Real Estate that it has "not received a single detail on any of the properties in the complaint. Without knowing the addresses, it's impossible to know the rightful owner, the servicer or the condition of the property."
U.S. Bank spokeswoman Nicole Garrison-Sprenger went on to say in an email that in the "vast majority of cases" in which U.S. Bank is involved in a foreclosure, it serves as a trustee for an investment pool that encompasses the failed mortgage, and has "no role in servicing or maintaining that property."
"That is the responsibility of the servicer (typically another bank), and not the trustee," Garrison-Sprenger said. "It is often the case that we are mistaken as the owner of a property because of our role as trustee."
According to NFHA President Shanna Smith, the civil rights group intends to file similar lawsuits in the coming months targeting not just additional lenders, but also asset managers and preservation companies tasked with maintaining foreclosed properties.
But Smith indicated that the NFHA may also hold off on legal action if lenders demonstrate a willingness to work with the organization to resolve the maintenance inequities, pointing to Bank of America as an example. The lender reached out to the NFHA in January after catching wind of the NFHA's investigation, she said.
"We decided we'd talk with them to get this resolved," she said of Bank of America. "At this point we're trying to work through everything in a partnership way, rather than through a formal complaint."
Some of the properties looked at by the investigation are owned by the Federal Housing Administration, she said, and in order to rectify their neglect, the NFHA may sue contractors hired by the FHA to maintain foreclosed homes.
"As we look at FHA properties, we're finding some of that negligence," she said.
Examining over 1,000 bank-owned properties, the nonprofit's study focused on 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.
"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 NFHA reads. "On the other hand, REOs in white communities generally appeared inhabited, well-maintained and attractive to real estate agents and homebuyers."
Gerardo Ascencio, president of the National Association of Hispanic Real Estate Professionals, praised the efforts of the NFHA, alleging that banks' neglect of foreclosed homes in minority areas is a "widespread industry problem."
"Our view is that this issue is not exclusive to one or two lenders but an an industry-wide issue with tremendous opportunity for improvement across the board," he told AOL Real Estate. "We applaud NFHA for bringing this important issue to light."
In the wake of a housing crisis that caused around 4 million Americans to lose their homes to foreclosure, banks have taken on ownership of swarms of those properties. Foreclosures have pushed down prices by swelling the general supply of homes and sometimes selling at steep discounts. Failing to maintain the homes, which already are a drag on property values by virtue of being foreclosures, is generally seen as adding to their negative impact on neighborhoods.
The new report, the NFHA said in a statement, now "offers disturbing evidence that the same banks that peddled unsustainable loans to communities of color and triggered the current foreclosure crisis are now exacerbating damage to those communities."
Rebounding Real Estate Markets: Top 10 Turnaround Towns
Fair Housing Group Sues U.S. Bank Over Foreclosures
Median List Price Appreciation: 17.79 percent
Median Age of Inventory: -16.18 percent
Inventory Change: -29.25 percent
Home Price: $2.999 million
Sq. Ft.: 5,123
After slipping out of Realtor.com's top 10 rankings for the third quarter of last year, Punta Gorda has reclaimed status as a town in the vanguard of real estate recovery. Home prices are reportedly just beginning to trend upward. But they still have a long way to go: home prices in town are 56.2 percent lower than they were in 2006, at the peak of the housing boom.
Median List Price Appreciation: 9.09 percent
Median Age of Inventory: -28.89 percent
Inventory Change: -35.28 percent
At 11 percent, the Lakeland-Winter area has the highest rate of unemployment on Realtor.com's top 10. But the real estate market seems to be another story. Realtor.com says that the area was the fourth-most-searched spot by users of their listing service. Distressed home sales have fallen significantly from last year as well.
Home Price: $1.3 million
Sq. Ft.: 7,813
The local market may be on the road to recovery, but distressed home sales still are hindering the market. This French mansion is selling by way of short sale.
Median List Price Appreciation: 7.84 percent
Median Age of Inventory: -35.71 percent
Inventory Change: -41.63 percent
Home Price: $5 million
Sq. Ft.: 8,700
Sale prices in this sultry town have risen 18 percent year-over-year, as of November, quite an encouraging sign for the local market. Meanwhile, unemployment is shrinking. The rate fell to 9.4 percent in November.
This Mediterranean may have just seen its price slashed, but with a $5 million ask, it'll still cost you a pretty penny.
Median List Price Appreciation: 13.38 percent
Median Age of Inventory: -13.64 percent
Inventory Change: -35.94 percent
Home Price: $19.9 million
Sq. Ft.: 8,226
Naples finds its way onto Realtor.com's list for the first time this quarter, thanks, in part, to its housing market's 13.64 percent decline in median age inventory and 13.38 increase in median list price.
Naples offers its fair share of uber-luxury homes. This waterfront mansion, at nearly $20 million, costs $2,419 per square foot.
Pictured here is a dining room of the home (we're guessing there's probably another one considering the place is 8,000 square feet). The elaborately decorated room features what appears to be a flying saucer. Maybe it can beam up the filet mignon.
Median List Price Appreciation: 13.77 percent
Median Age of Inventory: -23.42 percent
Inventory Change: -39.66 percent
Home Price: $1.5 million
Sq. Ft.: 4,875
A drop in foreclosures in this city shrank its year-over-year for-sale inventory by a whopping 40 percent as of last year's fourth quarter. The city also enjoys the benefit of an unemployment rate that is lower than the national average.
Median List Price Appreciation: 10.78 percent
Median Age of Inventory: -26.57 percent
Inventory Change: -31.01 percent
Home Price: $12.5 million
Sq. Ft.: 7,194
In Sarasota, home sales jumped 17 percent last year while median list prices defied the national downward price decline by ticking up 2 percent. Realtor.com goes so far as to suggest that the market may have graduated to "seller's market" status, unthinkable in most housing markets across the country.
Thrust out into the Gulf of Mexico, this jaw-dropping manse practically commands its own square-shaped peninsula. But apparently personal peninsulas don't come cheap in Sarasota: This property is listed to the tune of $12.5 million.
Pictured here is the home's covered dock that parks at least two boats. Inside the home you'll find an exercise room, library and attached "oversized" verandas. Other outdoor amenities include an expansive pool and shuffleboard courts.
Median List Price Appreciation: 31.27 percent
Median Age of Inventory: -17.60 percent
Inventory Change: -35.31 percent
Price: $8.7 million
Sq. Ft.: 13,723
The Fort Myers-Cape Coral area continues to chug along the path to recovery with its median sales price zooming upward by 20 percent last year. But there's more to brag about: The area experienced the highest year-over-year increase in median list price for the fourth quarter -- 31.27 percent.
Median List Price Appreciation: 8.22 percent
Median Age of Inventory: -36.52 percent
Inventory Change: -44.02 percent
Home Price: $3.99 million
Sq. Ft.: 8,676
Year-over-year inventory plummeted by 44 percent in Orlando in the fourth quarter of last year, while list prices rose 8.22 percent. Both movements point toward a market that is truly beginning to right itself.
Fit for the big-swinging, cigar-smoking mogul, this luxury home, which recently had its price cut, puts you close to the links.
Median List Price Appreciation: 15.38 percent
Median Age of Inventory: -27.47 percent
Inventory Change: -48.10 percent
Home Price: $5.995 million
Sq. Ft.: 11,039
An area that had its housing market severely bruised by the foreclosure crisis, the Phoenix-Mesa area is mounting a recovery in a big way. While residents continue to file for foreclosure at a rate above the national average, the glut of cheap homes idling on the market has lured bargain-hunters. The area's relatively low unemployment rate of 7.7 percent also will work in its housing market's favor.
Median List Price Appreciation: 28.57 percent
Median Age of Inventory: -30.89 percent
Inventory Change: -51.44 percent
Home Price: $6 million
Sq. Ft.: 3,870
Buy in the city where the heat is on -- all night on the beach 'cause the housing slump's gone! Welcome to Miami (beinvenido a Miami)!
Miami leads the pack of cities building toward a recovery. Existing home sales in the Miami area leaped 51 percent in the third quarter compared to a year ago. Meanwhile, inventory shrank by half. Realtor.com suggests that much of the improvement is attributable to strong foreign activity in the market.
This luxury apartment may soon be the trophy home of some foreign magnate. According to Realtor.com, in May of last year, international buyers purchased about 60 percent of existing houses and condos and 90 percent of the newly built homes in Miami.