VOL. 129 | NO. 38 | Tuesday, February 25, 2014
Complaint Alleges Deutsche Bank Discrimination
By Amos Maki
Deutsche Bank allegedly discriminated against minority neighborhoods in the Memphis area in the way it handled bank-owned properties, according to a complaint filed with the federal government.
The complaint, filed Tuesday, Feb. 25, by the National Fair Housing Alliance with the Department of Housing and Urban Development, alleges that Deutsche Bank failed to maintain and market properties in predominantly minority neighborhoods.
Complaint against Deutsche Bank
“This discriminatory provision of services results in deteriorated and dilapidated dwellings for sale in predominantly African-American and Latino neighborhoods and well-kept properties for sale in white neighborhoods,” the Fair Housing Alliance claims in its complaint.
Deutsche Bank is the third major bank the national nonprofit housing alliance has accused of violating the Fair Housing Act in Memphis.
Bank officials responded to the complaint in a statement, saying, “Deutsche Bank as trustee does not engage in any of the activities alleged in the complaint. Loan servicing companies, and not Deutsche Bank as trustee, are solely responsible for the maintenance, marketing and resale of foreclosed properties.
“Deutsche Bank as trustee does not select, hire or compensate the loan servicers, nor does it have any role in, or oversight over, the actions the servicers take in connection with foreclosed properties.”
Last year, the Fair Housing Alliance filed similar complaints against Bank of America and U.S. Bank. Both banks strongly denied the allegations and questioned the alliance’s methodology and research.
The Fair Housing Alliance said the complaint was the result of an undercover investigation into how Deutsche Bank maintains and markets foreclosed homes it owns.
In line with the previous complaints against U.S. Bank and Bank of America, the Fair Housing Alliance said Deutsche Bank homes in minority neighborhoods were less likely to have for-sale signs and marketing materials and more likely to have problems –unkempt lawns, broken windows and graffiti – that discourage investment and drag down surrounding property values.
The alliance created a list of housing maintenance and marketing metrics – from broken windows to overgrown lawns and absent for-sale signs – and inspected 129 homes in Memphis, Chicago and Washington.
The complaint says Deutsche Bank properties in mostly white neighborhoods are more likely to have “well-maintained lawns, secured entrances and professional sales marketing,” while bank-owned properties in minority neighborhoods are more likely to have “poorly maintained yards, have unsecured entrances, appear to be vacant or abandoned and have poor curb appeal to prospective buyers.”
In the Memphis area, the alliance evaluated 21 properties it says were owned by
Deutsche Bank, 15 in African-American communities, one in a community with a majority of non-white residents, and five in predominantly white communities.
The alliance found that 75 percent of the properties in communities of color had “substantial amounts of trash,” while only 20 percent of the properties in white communities had the same problem. The alliance determined that 63 percent of the properties in minority neighborhoods had “overgrown grass and leaves,” while
40 percent of the properties in predominantly white communities had the same problem.
The alliance also said homes in minority neighborhoods were more likely to have broken or boarded-up windows, damaged roofs and damaged fences.
In June, Deutsche Bank reached a settlement with the city of Los Angeles to resolve a 2011 lawsuit that claimed the bank acted like a “slumlord” in low-income and minority neighborhoods. Deutsche Bank said Los Angeles sued the wrong party because it was acting as trustee and the settlement funds are being paid by the loan servicers and trusts responsible for the Los Angeles properties, not Deutsche Bank.
“As we have said from the outset, loan servicers are responsible for maintaining foreclosed properties,” Deutsche Bank said in a statement regarding the Los Angeles settlement. “Deutsche Bank did not admit any liability or wrongdoing as part of the settlement and continues to dispute the claims asserted by the city.”
Similarly, U.S. Bank said in its response last year that the Fair Housing Alliance targeted the wrong entity because it was acting as trustee on the properties. And Bank of America said many properties included in previous allegations made by the Fair Housing Alliance were “the responsibility of other entities to maintain and market.”
In a PDF of the most recent complaint, the alliance includes images of a dilapidated home at 2540 Tutwiler Ave. in Memphis and a well-maintained home at 5553 Ewe Turn Cove in Arlington. Property records show Deutsche Bank owns the home at 2540 Tutwiler as trustee in care of Ocwen Loan Servicing LLC of West Palm Beach, Fla. There is not a 5553 Ewe Turn Cove in Arlington but there is a 5535 Ewe Turn Cove owned by Deutsche Bank in care of Ocwen Loan Servicing LLC and PMOS LLC, according to property records.
The Fair Housing Act bans housing discrimination and applies to housing and housing-related activities, including the maintenance, appraisal, listing, marketing and selling of homes.
Memphis and Shelby County sued Wells Fargo under the act in 2009, alleging "unlawful, irresponsible, unfair, deceptive and discriminatory" lending practices. 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.