Racial Discrimination by Banks Is Worsening the Foreclosure Crisis

Is there a house in your neighborhood that everybody hates to walk past? You know, the one with broken and boarded up windows, trash left to gather on the lawn, and grass so overgrown it’s becoming a habitat for rodents?

If you have a house like that in your community, you know it’s more than just an eyesore. Neglected, vacant houses depress property values throughout the community, and can threaten health and safety. They erode the sense of community and stability that creates vibrant localities, and they hamper economic resiliency. With a national foreclosure crisis still in full swing, such houses are all too common.

You might be surprised to learn, though, that if you have problem properties like that in your neighborhood, there’s a good chance your absentee neighbor is a bank. More shocking still, banks are neglecting houses they own in minority communities even more frequently—much more frequently—than those they hold in white communities.

A detailed undercover investigation unveiled last week by the National Fair Housing Alliance and several regional partners shows not only that banks too frequently fail to maintain foreclosed properties that they own, but that they tend to neglect their properties in communities of color at a much higher rate, with devastating consequences.

A large number of the neglected, bank-owned properties have broken or missing doors and windows, inviting vandalism and trespassers. And many have safety hazards that endanger the public. Those and other defects are significantly more prevalent in bank-owned properties located in communities of color. Another finding is that, on average, the banks are not marketing houses located in communities of color as aggressively to individual homebuyers as they do properties in white neighborhoods. The properties in white neighborhoods are, for example, more likely to have clear and professional “for sale” signs. When banks both poorly maintain and poorly market foreclosed houses, the properties tend to stay vacant longer and to eventually be sold to speculators, rather than to people who would make the houses their home.

The discriminatory differences are stark. In Dayton, Ohio, for example, 60% of bank-owned properties in African-American neighborhoods had broken or unsecured doors, compared to only 18% in white neighborhoods. In Atlanta, properties in African-American neighborhoods were almost five times more likely than homes in white neighborhoods to lack a “for sale” sign. And in Dallas, 73% of the bank-owned homes in predominantly non-white neighborhoods had trash on their properties, while only 37% in white areas did.

Neighbors of all races who live near foreclosed, bank-owned properties, the investigation found, are pulling together to keep them presentable—doing maintenance the banks should be doing, like mowing lawns and removing trash. But in communities of color, neighbors reported seeing home improvement contractors working on those properties at only half the rate seen by neighbors in predominantly white areas.

The bank behavior identified by this investigation is unethical, unlawful, and harmful to our economy. It breaches our basic national values of equal opportunity and the common good. It violates the Fair Housing Act of 1968, signed 44 years ago this week in the wake of Dr. Martin Luther King Jr.’s assassination. And it is holding back our economic recovery by, among other things, depressing home prices and hampering sales.

It’s hard to know all the reasons why banks are discriminating in this way. Bias and unfounded stereotypes about minority communities and homes, however, are a likely root cause. The investigators controlled for 39 race-neutral factors like building structure, water damage, and curb appeal, so the different treatment is indisputably about race, and not class or other home or neighborhood characteristics.

This investigation should be a wake up call for banks, regulators, local governments, and the neighbors of these bank-owned properties. Among the solutions identified by the National Fair Housing Alliance are anti-discrimination investigations by the Consumer Financial Protection Bureau and other enforcement agencies, making information about bank-owned properties more publicly accessible, and prioritizing buyers who will occupy these properties over speculators who may warehouse them.

As Americans struggle together toward a lasting economic recovery, good neighbors are more important than ever. It’s time to remind America’s banks that this includes them.

Racial Discrimination by Banks Is Worsening the Foreclosure Crisis

Is there a house in your neighborhood that everybody hates to walk past? You know, the one with broken and boarded up windows, trash left to gather on the lawn, and grass so overgrown it’s becoming a habitat for rodents?

If you have a house like that in your community, you know it’s more than just an eyesore. Neglected, vacant houses depress property values throughout the community, and can threaten health and safety. They erode the sense of community and stability that creates vibrant localities, and they hamper economic resiliency. With a national foreclosure crisis still in full swing, such houses are all too common.

You might be surprised to learn, though, that if you have problem properties like that in your neighborhood, there’s a good chance your absentee neighbor is a bank. More shocking still, banks are neglecting houses they own in minority communities even more frequently—much more frequently—than those they hold in white communities.

A detailed undercover investigation unveiled last week by the National Fair Housing Alliance and several regional partners shows not only that banks too frequently fail to maintain foreclosed properties that they own, but that they tend to neglect their properties in communities of color at a much higher rate, with devastating consequences.

A large number of the neglected, bank-owned properties have broken or missing doors and windows, inviting vandalism and trespassers. And many have safety hazards that endanger the public. Those and other defects are significantly more prevalent in bank-owned properties located in communities of color. Another finding is that, on average, the banks are not marketing houses located in communities of color as aggressively to individual homebuyers as they do properties in white neighborhoods. The properties in white neighborhoods are, for example, more likely to have clear and professional “for sale” signs. When banks both poorly maintain and poorly market foreclosed houses, the properties tend to stay vacant longer and to eventually be sold to speculators, rather than to people who would make the houses their home.

The discriminatory differences are stark. In Dayton, Ohio, for example, 60% of bank-owned properties in African-American neighborhoods had broken or unsecured doors, compared to only 18% in white neighborhoods. In Atlanta, properties in African-American neighborhoods were almost five times more likely than homes in white neighborhoods to lack a “for sale” sign. And in Dallas, 73% of the bank-owned homes in predominantly non-white neighborhoods had trash on their properties, while only 37% in white areas did.

Neighbors of all races who live near foreclosed, bank-owned properties, the investigation found, are pulling together to keep them presentable—doing maintenance the banks should be doing, like mowing lawns and removing trash. But in communities of color, neighbors reported seeing home improvement contractors working on those properties at only half the rate seen by neighbors in predominantly white areas.

The bank behavior identified by this investigation is unethical, unlawful, and harmful to our economy. It breaches our basic national values of equal opportunity and the common good. It violates the Fair Housing Act of 1968, signed 44 years ago this week in the wake of Dr. Martin Luther King Jr.’s assassination. And it is holding back our economic recovery by, among other things, depressing home prices and hampering sales.

It’s hard to know all the reasons why banks are discriminating in this way. Bias and unfounded stereotypes about minority communities and homes, however, are a likely root cause. The investigators controlled for 39 race-neutral factors like building structure, water damage, and curb appeal, so the different treatment is indisputably about race, and not class or other home or neighborhood characteristics.

This investigation should be a wake up call for banks, regulators, local governments, and the neighbors of these bank-owned properties. Among the solutions identified by the National Fair Housing Alliance are anti-discrimination investigations by the Consumer Financial Protection Bureau and other enforcement agencies, making information about bank-owned properties more publicly accessible, and prioritizing buyers who will occupy these properties over speculators who may warehouse them.

As Americans struggle together toward a lasting economic recovery, good neighbors are more important than ever. It’s time to remind America’s banks that this includes them.

Racial Discrimination by Banks Is Worsening the Foreclosure Crisis

Is there a house in your neighborhood that everybody hates to walk past? You know, the one with broken and boarded up windows, trash left to gather on the lawn, and grass so overgrown it’s becoming a habitat for rodents?

If you have a house like that in your community, you know it’s more than just an eyesore. Neglected, vacant houses depress property values throughout the community, and can threaten health and safety. They erode the sense of community and stability that creates vibrant localities, and they hamper economic resiliency. With a national foreclosure crisis still in full swing, such houses are all too common.

You might be surprised to learn, though, that if you have problem properties like that in your neighborhood, there’s a good chance your absentee neighbor is a bank. More shocking still, banks are neglecting houses they own in minority communities even more frequently—much more frequently—than those they hold in white communities.

A detailed undercover investigation unveiled last week by the National Fair Housing Alliance and several regional partners shows not only that banks too frequently fail to maintain foreclosed properties that they own, but that they tend to neglect their properties in communities of color at a much higher rate, with devastating consequences.

A large number of the neglected, bank-owned properties have broken or missing doors and windows, inviting vandalism and trespassers. And many have safety hazards that endanger the public. Those and other defects are significantly more prevalent in bank-owned properties located in communities of color. Another finding is that, on average, the banks are not marketing houses located in communities of color as aggressively to individual homebuyers as they do properties in white neighborhoods. The properties in white neighborhoods are, for example, more likely to have clear and professional “for sale” signs. When banks both poorly maintain and poorly market foreclosed houses, the properties tend to stay vacant longer and to eventually be sold to speculators, rather than to people who would make the houses their home.

The discriminatory differences are stark. In Dayton, Ohio, for example, 60% of bank-owned properties in African-American neighborhoods had broken or unsecured doors, compared to only 18% in white neighborhoods. In Atlanta, properties in African-American neighborhoods were almost five times more likely than homes in white neighborhoods to lack a “for sale” sign. And in Dallas, 73% of the bank-owned homes in predominantly non-white neighborhoods had trash on their properties, while only 37% in white areas did.

Neighbors of all races who live near foreclosed, bank-owned properties, the investigation found, are pulling together to keep them presentable—doing maintenance the banks should be doing, like mowing lawns and removing trash. But in communities of color, neighbors reported seeing home improvement contractors working on those properties at only half the rate seen by neighbors in predominantly white areas.

The bank behavior identified by this investigation is unethical, unlawful, and harmful to our economy. It breaches our basic national values of equal opportunity and the common good. It violates the Fair Housing Act of 1968, signed 44 years ago this week in the wake of Dr. Martin Luther King Jr.’s assassination. And it is holding back our economic recovery by, among other things, depressing home prices and hampering sales.

It’s hard to know all the reasons why banks are discriminating in this way. Bias and unfounded stereotypes about minority communities and homes, however, are a likely root cause. The investigators controlled for 39 race-neutral factors like building structure, water damage, and curb appeal, so the different treatment is indisputably about race, and not class or other home or neighborhood characteristics.

This investigation should be a wake up call for banks, regulators, local governments, and the neighbors of these bank-owned properties. Among the solutions identified by the National Fair Housing Alliance are anti-discrimination investigations by the Consumer Financial Protection Bureau and other enforcement agencies, making information about bank-owned properties more publicly accessible, and prioritizing buyers who will occupy these properties over speculators who may warehouse them.

As Americans struggle together toward a lasting economic recovery, good neighbors are more important than ever. It’s time to remind America’s banks that this includes them.

Racial Discrimination by Banks Is Worsening the Foreclosure Crisis

Is there a house in your neighborhood that everybody hates to walk past? You know, the one with broken and boarded up windows, trash left to gather on the lawn, and grass so overgrown it’s becoming a habitat for rodents?

If you have a house like that in your community, you know it’s more than just an eyesore. Neglected, vacant houses depress property values throughout the community, and can threaten health and safety. They erode the sense of community and stability that creates vibrant localities, and they hamper economic resiliency. With a national foreclosure crisis still in full swing, such houses are all too common.

You might be surprised to learn, though, that if you have problem properties like that in your neighborhood, there’s a good chance your absentee neighbor is a bank. More shocking still, banks are neglecting houses they own in minority communities even more frequently—much more frequently—than those they hold in white communities.

A detailed undercover investigation unveiled last week by the National Fair Housing Alliance and several regional partners shows not only that banks too frequently fail to maintain foreclosed properties that they own, but that they tend to neglect their properties in communities of color at a much higher rate, with devastating consequences.

A large number of the neglected, bank-owned properties have broken or missing doors and windows, inviting vandalism and trespassers. And many have safety hazards that endanger the public. Those and other defects are significantly more prevalent in bank-owned properties located in communities of color. Another finding is that, on average, the banks are not marketing houses located in communities of color as aggressively to individual homebuyers as they do properties in white neighborhoods. The properties in white neighborhoods are, for example, more likely to have clear and professional “for sale” signs. When banks both poorly maintain and poorly market foreclosed houses, the properties tend to stay vacant longer and to eventually be sold to speculators, rather than to people who would make the houses their home.

The discriminatory differences are stark. In Dayton, Ohio, for example, 60% of bank-owned properties in African-American neighborhoods had broken or unsecured doors, compared to only 18% in white neighborhoods. In Atlanta, properties in African-American neighborhoods were almost five times more likely than homes in white neighborhoods to lack a “for sale” sign. And in Dallas, 73% of the bank-owned homes in predominantly non-white neighborhoods had trash on their properties, while only 37% in white areas did.

Neighbors of all races who live near foreclosed, bank-owned properties, the investigation found, are pulling together to keep them presentable—doing maintenance the banks should be doing, like mowing lawns and removing trash. But in communities of color, neighbors reported seeing home improvement contractors working on those properties at only half the rate seen by neighbors in predominantly white areas.

The bank behavior identified by this investigation is unethical, unlawful, and harmful to our economy. It breaches our basic national values of equal opportunity and the common good. It violates the Fair Housing Act of 1968, signed 44 years ago this week in the wake of Dr. Martin Luther King Jr.’s assassination. And it is holding back our economic recovery by, among other things, depressing home prices and hampering sales.

It’s hard to know all the reasons why banks are discriminating in this way. Bias and unfounded stereotypes about minority communities and homes, however, are a likely root cause. The investigators controlled for 39 race-neutral factors like building structure, water damage, and curb appeal, so the different treatment is indisputably about race, and not class or other home or neighborhood characteristics.

This investigation should be a wake up call for banks, regulators, local governments, and the neighbors of these bank-owned properties. Among the solutions identified by the National Fair Housing Alliance are anti-discrimination investigations by the Consumer Financial Protection Bureau and other enforcement agencies, making information about bank-owned properties more publicly accessible, and prioritizing buyers who will occupy these properties over speculators who may warehouse them.

As Americans struggle together toward a lasting economic recovery, good neighbors are more important than ever. It’s time to remind America’s banks that this includes them.

On Foreclosures: Too Little, But Not Too Late

The Obama administration and states around the country have taken important steps in recent months toward putting American homeownership and financial security back on track. But it’s clear that more ambitious solutions are needed.

After a lull due to negotiations over fraudulent bank practices, foreclosures are expected to come roaring back this year, with hundreds of thousands of Americans newly at risk of losing their homes. As the scourge of foreclosures continues, the economic security of families and the stability of communities remain at risk. The crisis has deepened inequality throughout the country, and continues to hold us back as a nation.

To be effective, America’s solutions to this crisis must match the scale and shape of the problem. They must stem foreclosures while ensuring that the abuses that caused this problem never happen again. They must help families and communities rebuild their economic security while ensuring that successful homeownership remains a firm steppingstone to opportunity for working Americans. They must protect people from discrimination and ensure fair housing and lending for all Americans.

Earlier this month, a group of housing experts that includes The Opportunity Agenda, National Council of La Raza, and the National Fair Housing Alliance released a Compact for Home Opportunity. The Compact offers over a dozen practical policy solutions that, taken together, will reduce foreclosures, help families and communities restore their economic security, and rebuild the American Dream for the 21st century. It is a crucial part of the national Home for Good campaign that is gaining strength around the country.

One of the Compact’s calls is for Fannie Mae and Freddie Mac to reduce the principal on loans they own or back to fair market value. A range of economists, experts, and Administration officials agree that doing so would prevent foreclosures while strengthening our economy, improving overall property values and, in the long term, benefiting Fannie and Freddie’s solvency. Yet, Edward DeMarco, acting head of the federal agency that governs Fannie and Freddie, has inexplicably refused to consider principal reduction as a broad-based solution. His position is particularly indefensible, given that Fannie and Freddie are currently owned by the American people after a massive federal rescue in 2008.

While keeping the pressure on DeMarco is key, the Compact for Home Opportunity offers many other things that federal, state, and local actors, as well as private industry, can do today to drastically improve Americans’ housing prospects. One particularly effective example is supporting qualified counseling to Americans considering homeownership and those facing financial difficulty. Counseling by professionals certified by HUD significantly reduces the likelihood of being snagged by predatory lending practices and of running into financial trouble down the line. It’s an investment that saves homes and heartache, as well as tax dollars.

Principal reduction by Fannie and Freddie, housing counseling, and many other solutions exist that can strengthen home opportunity for everyone in our nation. It’s not too late to turn things around. But the clock is ticking.

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