US Bank Accused of Housing Discrimination in Memphis

By Amos Maki

A fair housing organization is accusing a second major bank of discriminating against minority neighborhoods and property owners in Memphis for the way it handled bank-owned properties.

The National Fair Housing Alliance on Tuesday, Oct. 15, amended a complaint with the U.S. Department of Housing and Urban Development, alleging U.S. Bank failed to maintain and market properties in minority neighborhoods, while paying special care to its homes in predominantly white neighborhoods. The national nonprofit housing alliance said its investigation found that the bank’s properties in predominantly minority neighborhoods were much more likely to have structural and aesthetic problems than its homes in white neighborhoods.

The fair housing alliance said homes in minority neighborhoods were less likely to have for-sale signs and marketing materials and more likely to have broken windows, unkempt lawns, trash and other problems that would discourage investment while dragging down surrounding values.

“This is not an appealing way of having a real estate agent show you this house,” said Shanna Smith, president and CEO of National Fair Housing Alliance, referring to a home with several visible deficiencies.

Smith said the properties were neglected even though a better maintained home would sell more quickly and at a higher price.

U.S. Bank has a fiduciary duty to get the best price for these homes,” Smith said.

The amended complaint against U.S. Bank, whose parent company is Minneapolis-based U.S. Bancorp, comes less than a month after the housing alliance made similar claims against Bank of America.

The alliance created a list of housing maintenance and marketing issues – from broken windows to overgrown lawns and absent for-sale signs – and inspected homes across the country in predominantly white and in minority neighborhoods.

The amended complaint was filed under the Fair Housing Act, which makes it illegal to discriminate based on race, color, national origin, religion, sex, disability or familial status, as well as the race or national origin of residents of a neighborhood. The law applies to housing and housing-related activities, including the maintenance, appraisal, listing, marketing and selling of homes.

A U.S. Bank spokesperson said the claims were unfounded since the company was acting as trustee on the properties.

U.S. Bank is one of the nation’s leading corporate trustees, which is important in this matter because it means we have no legal right to service or maintain properties that are held in an investment pool for which we are trustee,” said Teri Charest, spokesperson for U.S. Bank. “The vast majority of the properties originally identified by NFHA are properties where we are trustee. We have no legal ability to service or maintain these properties.”

But Smith said the Fair Housing Act applies to companies serving as trustee.

In Memphis, the housing alliance observed 21 properties beginning in May – 11 in predominantly black neighborhoods, four in majority non-white neighborhoods and six in predominantly white neighborhoods.

The bank-owned homes in the predominantly minority neighborhoods were more likely to have significant marketing and structural deficiencies than the homes in predominantly white neighborhoods.

In the amended complaint filed Tuesday, 96 homes across the country, including the ones in Memphis, were included. Along with Memphis, Baton Rouge, La., Indianapolis, Ind., and Milwaukee, Wis., were new cities included in the amended complaint, which also features new evidence in the Chicago area and Baltimore, Md.

U.S. Bank is the third major bank to come under scrutiny for alleged violations of the Fair Housing Act in Memphis and Shelby County. The housing alliance said in September that Bank of America violated the Fair Housing Act by better maintaining homes in predominantly white neighborhoods compared to predominantly minority neighborhoods.

In 2009, the city and county sued Wells Fargo, alleging “unlawful, irresponsible, unfair, deceptive and discriminatory” lending practices under the act.