Housing
National Group Files Housing Complaints Against Major Banks
Discrimination in managing foreclosures alleged against US Bank and Wells Fargo
By Charlene Crowell
Center for Responsible Lending
I
n the aftermath of Dr. Martin Luther
King Jr.’s assassination, Congress enact-
ed the federal Fair Housing Act on April
11, 1968. This historic federal act made it
illegal to discriminate in housing and hous-
ing related-activities on the basis of race,
color, national origin, disability or sex. Fur-
ther, the law applies to marketing and sales
of homes, listings, appraisals and mainte-
nance.
Now 44 years later – and not for the first
time –two of the nation’s largest banks -
Wells Fargo and US Bank are accused of
serious violations.
Following an undercover investigation of
foreclosed single-family homes in eight
metropolitan areas, the National Fair Hous-
ing Alliance (NFHA) filed two
discrimination complaints with Housing
and Urban Development (HUD). The com-
plaints alleges that in handling foreclosed
properties in its possession, US Bank and
Wells Fargo show distinct and systematic
differences in maintenance and marketing
of these homes. And once again, according
to the complaints, black neighborhoods are
getting short shrift. The investigation
involved foreclosed homes in Atlanta, Bal-
timore, Dallas, Dayton, Miami/ Fort
Lauderdale, Philadelphia, Oakland and
Washington, DC.
NFHA determined that while properties in
predominantly white areas were consistent-
ly well-maintained with signage indicating
the homes were available for sale, fore-
closed homes in minority communities
typically had multiple maintenance and
marketing deficiencies such as substantial
amounts of trash, overgrown grass and
shrubs, broken doors or locks, peeling or
chipped paint and holes in the structures. In
Atlanta, Baltimore and Washington, DC,
nearly 75 percent of foreclosed homes held
by US Bank in minority neighborhoods had
substantial amounts of trash.
The availability of “for sale” signs on
homes in these eight markets also revealed
a racial divide. Signage is significant as it
represents a marketing tool and contact
information for neighbors who could want
to report any problems with the property. In
both Philadelphia and in Oakland, NFHA
alleged discriminatory mortgage practices
by this same bank.
As HUD reviews the NFHA complaints, it
is useful to remember that these new allega-
tions are consistent with broader research
findings by the Center for Responsible
Lending:
· Racial and ethnic differences in foreclo-
sure rates persist even after accounting for
differences in borrower incomes. Among
borrowers with a FICO score of over 660
(indicating good credit), African Americans
Wells Fargo’s disregard for homes in
communities of color has severely damaged
these communities
found almost twice as many for sale signs in
white communities than in black or Latino
communities. In Dayton, 90 percent of
Wells Fargo properties and 94 percent of all
US Bank properties located in minority
areas had no signage at all. In Washington,
DC, Wells Fargo had four times as many for
sale signs in white neighborhoods than in
neighborhoods of color.
“Wells Fargo’s disregard for homes in
communities of color has severely damaged
these communities,” said Shanna L. Smith,
NFHA President and CEO. “The company
has also hindered this nation’s efforts to
promote fair housing and is in clear viola-
tion of the Fair Housing Act.”
For Wells Fargo, the NFHA discrimina-
tion complaint is not the first time this large
lender has been identified with discrimina-
tory lending practices. In recent years both
the cities of Baltimore and Memphis have
and Latinos received a high interest rate
loan more than three times as often as white
borrowers.
· African Americans and Latinos were
much more likely to receive high interest
rate (subprime) loans and loans with fea-
tures that are associated with higher
foreclosures, specifically prepayment
penalties and hybrid or option adjustable-
rate mortgages.
· Between 2004 and 2008, African-Amer-
ican families were almost twice as likely to
have been impacted by the crisis. As of Feb-
ruary 2011, approximately one quarter of all
African-American borrowers had either lost
their home to foreclosure or were seriously
delinquent, compared to less than 12 per-
cent for white borrowers.
These findings are also mirrored in a
series of settlements negotiated by the Jus-
tice Department’s Civil Rights Division. In
2011 alone, this division filed a record eight
lending-related federal law suits, and
obtained eight settlements providing for
more than $350 million in relief to the vic-
tims of illegal lending practices. This figure
includes the settlement with Countrywide
Financial Corporation, the largest lending
discrimination case ever brought by the
Department of Justice, as well as a record
settlement under the Servicemembers Civil
Relief Act.
In the approximately 24 months since this
administrative adjustment, the division has
filed or resolved 16 lending matters. By
way of contrast, from 1993 to 2008, the
department filed or resolved 37 lending
matters, an average of a little more than two
cases per year.
Fair housing may have been the law for
44 years; but its letter and spirit have yet to
be fully embraced. Ironically the theme for
the 2012 national observance is “Live
Free”. — If only it were so.
Charlene Crowell is a communications
manager with the Center for Responsible
Lending.
April 25, 2012 The Portland Skanner Page 11