BOA taken to task for discriminating against minority neighborhoods

by Ryan Smith26 Sep 2013

Bank of America consistently allows foreclosed homes in minority neighborhoods to fall into disrepair while maintaining and marketing foreclosed homes in predominantly white neighborhoods, according to a complaint filed Wednesday by the National Fair Housing Alliance. 

The accusation comes upon the heels of a $2.2 million judgment against the lender in a racial discrimination case.

The NFHA complaint, submitted to the Department of Housing and Urban Development, centers around the upkeep of real-estate owned (REO) properties. A house becomes an REO property when a lender has foreclosed on it and taken possession. Once a home becomes an REO property, it is the responsibility of the bank that owns it to maintain it in good repair and sell it to a new buyer. 

According to the complaint, the NFHA has tracked how Bank of America maintained its REO properties since 2009, comparing maintenance quality on properties in predominantly white neighborhoods to that in neighborhoods with predominantly African-American, Hispanic or other nonwhite populations. 

“Throughout its investigation of Bank of America’s REO properties in 2011, 2012, and 2013, Complainants observed stark racial disparities in Bank of America’s maintenance and marketing of REO properties between communities of color and predominantly White communities,” the complaint stated.“In the 18 metropolitan areas where Complainants evaluated a number of Bank of America’s REO properties, the data and pictures collected in this investigation demonstrate that Bank of America has engaged in a systemic and particularized practice of maintaining and marketing its REO properties in a state of disrepair in communities of color while maintaining and marketing REO properties in predominantly White communities in a materially better condition.”

The NFHA survey graded properties in six categories – curb appeal, structure, occupancy, painting and siding, gutters, water damage, and utilities – looking for specific indicators, such as the condition of the grass or the presence of trash in the yard, in each category. According to the complaint, Bank of America’s REO properties in predominantly minority neighborhoods were far more likely to have a high number of deficiencies than those in predominantly white neighborhoods.

In several California cities, for instance, “REO properties in communities of color were 3 times as likely as REOs in White communities to have between 10% and 50% of their lawns covered in dead grass,” more than three times as likely to have peeling or chipped paint, and nearly twice as likely to have holes in the structure itself, according to the complaint. In Atlanta, 10.8% of the bank’s REO properties in predominantly minority neighborhoods had “pervasive mold,” while none of the lender’s REO properties in predominantly white neighborhoods did. At one property in Las Vegas, the complaint alleges, investigators found the decaying corpse of a dog in the yard.

“The numbers are unbelievable,” Arturo Alvarado, executive director of the Denver Metro Fair Housing Center, said in a Wednesday statement. “It is clear that Bank of America does not care about maintaining REO properties, particularly those in communities of color.”

Properties in minority neighborhoods are also much less likely to have “for sale” signs posted than those in white neighborhoods, according to the complaint. As a result of the poor maintenance and lack of marketing, the complaint alleges, REO properties in minority neighborhoods are vacant much longer than those in white neighborhoods.

For its part, Bank of America denies the allegations. “Bank of America applies uniform practices to the management and marketing of vacant bank-owned properties across the U.S., regardless of their location,” a spokeswoman for the bank said in a statement.

Earlier this week, Bank of America was ordered to pay $2.2 million in restitution for discriminating against more than 1,000 black job applicants.