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VOL. 128 | NO. 189 | Friday, September 27, 2013

Complaint Alleges Bank of America Discrimination

By Amos Maki

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Bank of America allegedly discriminated against minority neighborhoods and property owners in Memphis in the way it handled bank-owned properties, according to an amended complaint filed with the federal government.

(Daily News/Andrew J. Breig)

The complaint, filed Wednesday, Sept. 25, by the National Fair Housing Alliance with the Department of Housing and Urban Development, charges that Bank of America failed to maintain and market properties in minority neighborhoods, while giving special treatment 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.

Third Amended Fair Housing Complaint

Fair Housing Complaint: Exhibit A

Fair Housing Complaint: Exhibit B

The amended complaint, which includes 168 new properties across the country, 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 and other problems that would discourage investment and drag down surrounding property values.

City Attorney Herman Morris said his office is reviewing the complaint and will make recommendations to Memphis Mayor A C Wharton Jr.

“The City Attorney’s office is reviewing the lawsuit against Bank of America and will advise the mayor on whether we feel the interests of the city are adequately protected, and if not, will explore joining the pending lawsuit,” Morris said.

Bank of America strongly denied the allegations, saying the housing alliance’s methodology was flawed and that multiple factors – from legal proceedings involving evictions and foreclosures to the state of the property when the bank acquired it – play a role in everything from how homes look to the time it can take to sell them.

“They’re looking at one moment in time and they don’t understand all the factors that can impact these homes,” said Bank of America spokeswoman Jumana Bauwens.

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

In Memphis, the housing alliance observed 12 properties, five in predominantly black neighborhoods and seven in predominantly white neighborhoods. The bank-owned homes in the predominantly black neighborhoods were 2.3 times more likely to have significant marketing and structural deficiencies than the homes in predominantly white neighborhoods. The complaint said none of the five properties in minority neighborhoods had for-sale signs.

The housing alliance showed a picture of one Memphis property it said was taken from Bank of America’s website. The home was tagged with graffiti, had broken and boarded-up windows, overgrown lawns and no for-sale sign. The homes surrounding the bank-owned property were well-maintained.

“What real estate agent is going to want to show this house in its condition?” said Shanna L. Smith, president and CEO of the National Fair Housing Alliance. “Shame on Bank of America.”

Bauwens said Bank of America would like the housing alliance to turn over the list of properties cited in the complaint to confirm if the bank is responsible for them, and, if so, to take corrective action. So far, the housing alliance has declined to turn over the addresses of the properties highlighted in the complaint.

“If we missed a property, we want to know about it,” Bauwens said. “It is in the best interest of the bank, investor and community for the property to be marketed and sold to new homeowners.”

Smith said the practices alleged in the complaint have continued, despite making Bank of America aware of the problems.

“Bank of America has been on notice since 2009,” Smith said. “We had several meetings with them, and they were all talk and no show.”

Smith said HUD is exploring Bank of America’s practices and that the housing alliance, possibly in conjunction with states and municipalities, could take further legal action against the bank.

Bauwens said Bank of America has been working with HUD to resolve complaints.

“We have been cooperating with HUD, and we will continue to work with them,” Bauwens said.

Including the new cities, the complaint involves 18 metropolitan areas covering more than 30 municipalities, including Chicago, Atlanta, Washington, Miami, Orlando, Fla., and Charleston, S.C.

Studies have shown that foreclosures have had a massive impact on minority neighborhoods across the nation, draining families of their wealth and leading to neighborhood decay.

According to a report from the Center for Responsible Lending, minority-owned homes have lost $1 trillion in value since 2007 due to neighboring foreclosures.

The Fair Housing Act 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. This law applies to housing and housing-related activities, including the maintenance, appraisal, listing, marketing and selling of homes.

Bank of America is the second major lender to come under scrutiny for alleged violations of the Fair Housing Act in Memphis and Shelby County.

The city and county sued Wells Fargo in 2009, alleging "unlawful, irresponsible, unfair, deceptive and discriminatory" lending practices under the act.

That lawsuit alleged that loans made by Wells Fargo in predominantly black areas between 2000 and 2008 were eight times more likely to go into foreclosure than loans in white areas, though Wells Fargo made nearly four times as many loans in mainly white communities. The suit alleged 43 percent of Wells Fargo's foreclosures were in black neighborhoods, though only 15 percent of its loans originated there.

Wells Fargo eventually agreed to pay $7.5 million to end the lawsuit, funds that were earmarked for down payment and home renovation assistance programs.

PROPERTY SALES 23 23 1,365
MORTGAGES 21 21 1,068
BUILDING PERMITS 117 117 3,173