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Friday, January 27, 2023

Discrimination complaint against Bank of America expanded

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Four years after Bank of America was formally accused of discriminatory practices in minority-majority neighborhoods in Indianapolis and several other cities, the issue remains unresolved, and the alleged discrimination continues to be found in more cities across the country.

The Federal Fair Housing Act complaint submitted to the U.S. Department of Housing and Urban Development says the bank has failed to properly maintain foreclosed properties in several communities of color, while bank-owned properties in predominantly white neighborhoods in the same cities appear to be routinely maintained.

Last week, the National Fair Housing Alliance (NFHA) announced the addition of six cities — including Gary, Indiana — to the complaint against the bank, plus the discovery of new evidence in cities that were already included. The complaint now includes 30 metropolitan areas, from coast to coast.

Though new evidence from Indianapolis was not submitted, Amy Nelson, executive director of the Fair Housing Center of Central Indiana, said the investigation is ongoing.

“We continue to conduct our investigations, look at properties at different times,” Nelson said. “As part of the evaluation, my staff physically goes to the foreclosure, we walk around the foreclosure, and we score it on 39 different basic items that the lender or, in this case, the bank, is responsible for maintaining.”

During those evaluations, staff members look at the condition of the lawn, shrubbery and other plants; check for unsecured or broken doors and windows; inspect fences, roofs, porch steps and handrails, gutters and other parts of the home; and look for issues like graffiti, trash, water damage and mold.

According to the original complaint filed in 2012, those inspections in Indianapolis turned up “significant racial disparities.” Compared to foreclosure properties in white neighborhoods, properties in communities of color were:

— More than twice as likely to have unsecured or broken doors,

— Almost twice as likely to have broken or boarded windows,

— More than four times as likely to have broken, hanging or obstructed gutters and more than twice as likely to have missing gutters,

— More than six times as likely to have holes in the structure of the home or a damaged roof.

The complaint also says more than 14 percent of the foreclosures in Indianapolis communities of color had graffiti, water damage, small amounts of mold and at least half of the property covered in dead grass, while none of the foreclosures in the city’s mostly white neighborhoods had any of these issues. Many of these disparities were also found in Gary, Indiana, according to the complaint.

Shanna Smith, president and CEO of NFHA, said some people might assume these damaged and poorly maintained homes are indicative of the condition of the neighborhood as a whole, but photos of neighboring properties juxtaposed with the BOA foreclosures in communities of color show that’s not necessarily the case.

During a webinar announcing the amended complaint, Smith also shared photos from Google — photos that were taken prior to foreclosure — showing well-maintained homes and lawns with no signs of the current issues.

Jenni Ruiz of Ruiz Realty, which specializes in marketing and selling foreclosure properties in central Indiana, says in general, the state of foreclosed homes in Indianapolis has improved in recent years and they’re selling much more easily, mostly due to low inventory. Curb appeal issues like long grass and untrimmed bushes, which might have once kept a foreclosed property from selling, no longer have the same impact.

“With low supply, we aren’t having these problems. They’re buying these foreclosures because they don’t have a choice; there’s no supply,” Ruiz said.

Claire Belby, vice president of communications and marketing at MIBOR REALTOR(r) Association, said all of central Indiana has about four months of inventory.

“Basically, that means if no more homes went on the market, it would take four months to sell everything that’s out there,” Belby said, adding that a six-month or seven-month inventory would be considered more balanced.

When bank-owned homes don’t sell so easily, Belby said, it can impact housing prices in the neighborhood.

“It will depress prices over time,” she said. “We don’t have any good data that talks about the direct percentage impact a foreclosure can have on a contiguous property, but anecdotally, as real estate professionals are pricing homes to sell in neighborhoods, they use all the comparables as a vehicle for pricing. Even a few foreclosures will affect that overall picture.”

Smith, with NFHA, said the poor maintenance practices laid out in the complaint against BOA keep foreclosed homes in communities of color vacant. In some cases, the homes aren’t even marketed with for sale signs in the yard. Nelson said in the Indianapolis homes investigated, 100 percent of the foreclosed homes in communities of color lacked a for sale sign. And the impact goes beyond just home values, Smith said.

Smith mentioned research that has shown a health impact on people living near foreclosed properties, including stress, high blood pressure and asthma, citing an American Heart Association study that tied hikes in blood pressure to “unhealthy stress caused by perceived instability of the neighborhood.”

In properties with trash and standing water, mosquitos and rodent infestations pose health concerns as well, Smith said.

The issue goes beyond BOA, too. Other complaints involving Indianapolis have been filed against Safeguard Properties, Fannie Mae and US Bank.

Nelson said she hopes these complaints can come to a resolution.

“We’re seeking resolution for these neighborhoods that have been so impacted by the foreclosure crisis, and specifically by the actions of Bank of America, when it comes to not properly marking and maintaining these properties to get them sold and to get them owner-occupied,” she said, citing a recent complaint, and subsequent resolution, involving Wells Fargo.

According to NFHA, Wells Fargo gave $30 million to the organization to be invested in communities harmed by its “disparate treatment” of foreclosure properties. The money has been used for home repair funds, foreclosure prevention, financial literacy education and more.

Nelson said the Wells Fargo resolution is a good guide for what BOA could do.

“Wells Fargo stepped up,” she said. “They made some changes to their process of how foreclosures were maintained, including having a set-aside period for owner-occupants to have first shots at those properties rather than going to investors and still sitting. There’s some great guidance there of things that could be done in order to resolve the case in a satisfactory way.”

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