NFHA: Zip Code Inequality

8/21/2019 NFHA: Zip Code Inequality

http://slidepdf.com/reader/full/nfha-zip-code-inequality 1/84

Zip Code Inequality:Discrimination by Banks in the Maintenance

of Homes in Neighborhoods of Color

August 27, 2014



ABOUT

ACKNOWLEDGMENTS

THENATIONAL

FAIR

HOUSING ALLIANCE

Founded in 1988 and headquartered in

Washington, DC, the National Fair Housing

Alliance is a consortium of more than 220

private, non-profit fair housing organizations,

state and local civil rights agencies, andindividuals from throughout the United States

Through comprehensive education, advocacy

and enforcement programs, NFHA protects and

promotes equal access to apartments, houses,

mortgage loans and insurance policies for al

residents of the nation.

This report benefited greatly from the knowledge, expertise, and wisdom of a number of people working

within the fair housing movement. The National Fair Housing Alliance and its partners would like to

thank:

• Stephen M. Dane and the team from Relman, Dane & Colfax, PLLC and Janell Byrd-Chicheste

from Mehri & Skalet, PLLC for their trusted legal assistance throughout the investigation and incisive

analysis of the legal issues uncovered; and

• David Lauri and Jim McCarthy of the Miami Valley Fair Housing Center for their outstandingtechnical support in developing a database used by all the fair housing centers involved in this project

nationwide.

This report would not have been possible without the commitment and dedication of the staff at both

NFHA and its partner fair housing agencies.



3

TABLE OFCONTENTS

EXECUTIVE SUMMARY ................................................ 2

SECTION 1: INTRODUCTION .................................... 4

SECTION 2: BACKGROUND ...................................... 8

SECTION 3: METHODOLOGY ................................ 21

SECTION 4: FINDINGS ........................................... 23

SECTION 5: RECOMMENDATIONS ......................... 39

SECTION 6: COMMUNITY RELIEF INITIATIVES ............44

SECTION 7: CONCLUSIONS .....................................50

APPENDIX: LOCAL FINDINGS ................................... 52

The work that provided the basis forthis publication was supported in partby funding under a grant with the U.S.Department of Housing and UrbanDevelopment. The substance andfindings of the work are dedicated tothe public. The author and publisherare solely responsible for the accuracyof the statements and interpretationscontained in this publication. Suchinterpretations do not necessarily reflect

the views of the federal government.

NFHA and its partners also usedtheir own resources to undertake thisinvestigation. We would like to thankFreddie Mac and Wells Fargo forproviding us with information on theirbest practices and for helping us tobetter understand the REO dispositionprocess.



2

In the past few years, banks and the federalgovernment have attempted throughcounseling, short sales, deeds-in-lieu and

principal reduction to cut down on the numberof foreclosures that complete the process andbecome bank-owned (also known as RealEstate Owned or REO properties). Despitethese efforts, vacant REO properties still existin record numbers in neighborhoods acrossthe country, particularly in neighborhoodsthat had been targeted with predatory loansand in neighborhoods of color. Althoughforeclosure rates have fallen nationwide,

recent estimates are that foreclosures stillaffect 1 in 96 households in the U.S. and thatanother three million troubled loans will likelyreach the foreclosure pipeline by 2017.1 Properties that complete the foreclosureprocess are then owned by the banks andmaintained by a bank’s contracted vendors.REOs often remain vacant for many monthsor years before being sold and can createblight and other negative outcomes forneighborhoods when not managed and

maintained responsibly.

As these properties are critically importantfor community stabilization, the NationalFair Housing Alliance (NFHA) has led anationwide examination of REO maintenanceand marketing practices of major lendersand Fannie Mae over the last 5 years. Sinceits last report on REO maintenance andmarketing practices in April 2012, NFHAand 16 of its partners have investigated morethan 2,400 REO properties. The evaluationstook into account over 30 different aspectsof the maintenance and marketing of each

1 WashingtonsBlog, “Home Foreclosure Rates areComparable to the Great Depression,” May 17, 2013,http://www.washingtonsblog.com/2013/05/have-more-people-lost-their-homes-than-during-the-great-depression.html.

property, including curb appeal, structure,signage, indications of water damage,and condition of paint, siding, and gutters/

downspouts. Many of the investigations wereconducted in stable neighborhoods wherethe rate of homeownership was high.

The investigation revealed a continuation ofextremely troubling disparities in maintenanceand marketing practices along racial lines.REO homes in White neighborhoods werecared for in a far superior manner than those in

African American and Latino neighborhoods.

While REO properties in predominantly Whiteneighborhoods were more likely to have neatlymanicured lawns, securely locked doors, andattractive, professional “For Sale” signs outfront, REOs in communities of color weremore likely to have overgrown yards, trash,unsecured doors, and broken or boardedwindows. REO properties in communities ofcolor were not maintained to the standardsof nearby homes and generally appearedabandoned, blighted, and unappealing to

potential homebuyers, even though theywere located in stable neighborhoodsin which neighboring homes were wellmaintained. On the other hand, REOs inWhite communities were maintained to thestandards of other houses in the neighborhoodand would have been attractive to realestate agents and potential homebuyers.

The REO investigation findings in 29metropolitan areas were aggregated, andsignificant differences in treatment werefound, including:

• REOs in communities of color were 2.2times more likely to have significantamounts of trash and debris on thepremises than REO properties in Whitecommunities.

EXECUTIVE SUMMARY



3

• REOs in communities of color were 2.3times more likely to have unsecured,broken, or damaged doors than REOs inWhite communities.

• REOs in communities of color were 2.0

times more likely to have damaged,broken, or boarded windows than REOhomes in White communities.

• Holes in the structure of the REO were2.1 times more likely in communities ofcolor than in White communities.

• REO properties in communities of colorwere 1.3 times more likely to have noprofessional “for sale” sign than REO

homes in White communities.

In many communities, these disparities wereeven more acute. For example:

• In Memphis, TN, REOs in communities ofcolor were 8.8 times more likely to havesignificant amounts of trash and debrislittered throughout the property thanREOs in White communities.

• In Hampton Roads, VA, REOs in

communities of color were 6 times morelikely to have unsecured, damaged,or boarded doors than REOs in Whitecommunities.

• In Miami, FL, REOs in communities ofcolor were 3.7 times more likely to haveovergrown grass or dead leaves on theproperty than REOs in White communities.

• In Kansas City, MO/KS, REOs incommunities of color were 3.6

times more likely to have damaged,broken, or boarded windowsthan REOs in White communities.

The federal Fair Housing Act requires banks,trustees, investors, servicers, and any otherresponsible party to maintain and market

properties that are for sale or rent withoutregard to the race or national origin of theresidents of a neighborhood. It is illegal totreat a neighborhood differently because ofthe race or national origin of the residents.

Moreover, these laws obligate banks, trustees,investors, and servicers to monitor the actionsof vendors engaged in performing housing-related transactions to ensure that those thirdparty entities are complying with fair housinglaws and regulations.

Communities of color are being left behindin our nation’s housing recovery because ofdiscriminatory treatment. Banks, lenders,trustees, investors, federal regulators, fair

housing and community development groups,local governments, and law enforcementmust work together to ensure that these sortsof discriminatory practices are eliminated inorder to reverse and stabilize the negativeoutcomes they are creating, particularly incommunities of color. Banks must restructuretheir maintenance and marketing models toensure equal treatment of REO properties inall neighborhoods so that communities ofcolor have a fair opportunity to recover andprosper.

REOs in communities of colorwere

2.2 times more likely to

have substantial trash

when compared to REOproperties in predominantly

White communities



4

Despite recent headlines reporting thatthe housing market is recovering and thatforeclosure rates are the lowest since the

foreclosure crisis began, neighborhoodsacross the country are still reeling from theeffects of the crisis. As of 2013, 4.4 millionforeclosures have been completed and thecrisis continues to strip communities of wealth.2 In December 2013, 9.3 million propertieswere reported to be deeply underwater,meaning that the owners owed 25 percentmore on their mortgage than their homes wereworth.3 These properties are at high risk of

becoming foreclosures in the coming monthsand suggest that the damage will continue forquite some time.

The large volume of foreclosures has notonly stripped families of their homes andwealth but has left a large inventory of emptyhomes repossessed by the banks. These REOproperties have surfaced in unprecedentednumbers in communities throughout Americasince the advent of the foreclosure crisis in

2007. In fact, in 2013 REOs represented 9.3percent of all residential sales, up from 8.7percent in 2011, and these numbers are moreheavily concentrated in communities of color.4 These properties present a huge obstacle forrecovery as the municipalities in which theseREOs are located suffer negative effects suchas a depleted tax base, neighborhood blight,health and safety concerns, and decreased

2 Corelogic, “Corelogic National Foreclosure Report

-December 2013,” http://www.corelogic.com/ research/fo rec losure- repor t /na t iona l - fo rec losure- repor t -december-2013.pdf.

3 Christie, Les, “Foreclosures hit six-year low in 2013,” http://

money.cnn.com/2014/01/16/real_estate/foreclosure-

crisis. 4 Realty Trac, “RealtyTrac (2014) Short Sales and ForeclosureSales Combined Accounted for 16 Percent of US ResidentialSales in 2013,” http://www.realtytrac.com/content/foreclosure-market-report/december-and-year-end-2013-us-residential-and-foreclosure-sales-report-7967.

market values that result in wealth loss forhomeowners who live near foreclosed homes.

Within this context, the increasing numberof REO properties and how well they aremaintained and marketed presents itself asa critical civil rights and fair housing issue.NFHA began to look into the issue of REOmaintenance and marketing in 2009. Theinitial investigation uncovered a patternof differing treatment of REO properties inWhite neighborhoods and REO propertiesin communities of color. This differential

treatment because of race and nationalorigin was a clear violation of the federal FairHousing Act. In April 2011, NFHA publishedthe initial findings of its REO maintenanceinvestigations in the report, “Here Comes theBank, There Goes the Neighborhood,” whichincluded data from 624 REO investigations infour cities. The report was designed to putbanks, as well as Fannie Mae and Freddie Mac,on notice about the discriminatory practicesidentified with respect to the treatment of REO

properties.

In April 2012, NFHA published anotherreport outlining findings from an in-depthinvestigation of more than 1,000 additionalbank-owned properties. This report, entitled“The Banks are Back, Our Neighborhoods AreNot,” included findings from nine metropolitanareas. NFHA completed the investigations inconjunction with four other fair housing centers.Subsequently, NFHA and its partners filed anumber of housing discrimination complaintswith the U.S. Department of Housing andUrban Development. The first complaint wasfiled against Wells Fargo Bank in April 2012.Wells Fargo and its REO division met withNFHA and HUD over the course of a year whichresulted in a HUD conciliation agreement inJune 2013. The agreement provided $27

SECTION 1: INTRODUCTION



5

million to NFHA and its 13 fair housingpartners to administer programs in targetedneighborhoods to increase homeownershipopportunities and stabilize communities in19 cities. Wells Fargo also paid $3 million

in damages and attorneys fees and providedfunds for a national conference to increaseawareness about REO issues. Wells Fargo alsoprovided $11.5 million to HUD for relief in anadditional 25 cities. Currently, NFHA and itspartners have complaints pending at HUDagainst Bank of America, U.S. Bank, DeutscheBank, and Fannie Mae’s field service vendors:Safeguard, Cyprexx, and Asset ManagementSpecialists. Only Wells Fargo stepped up toact affirmatively to identify issues and resolve

concerns. When Freddie Mac became awareof NFHA’s concerns about REO maintenance,its REO division sought recommendations andtraining from NFHA. Freddie Mac modifiedits REO maintenance and marketing businessmodel, and NFHA and its partners rarely finda Freddie Mac REO that is not in pristinecondition.

When other banks and Fannie Mae failedto take corrective actions after the issuanceof the April 2012 report and the filing ofcomplaints, NFHA continued to investigateREO maintenance and marketing practicesand expanded the partnership even further.Data included in this report was gatheredbetween April 2012 and December 2013by NFHA and its 17 partners at the Miami

Valley Fair Housing Center in Dayton,Ohio; Housing Opportunities Project forExcellence (HOPE) working in Miami-Dadeand Broward Counties, Florida; Metro FairHousing Services in Atlanta, Georgia; North

Texas Fair Housing Center in Dallas, Texas,serving the greater Dallas/Fort Worth area;HOPE Fair Housing Center in West Chicago,Illinois; Open Communities in Winnetka,Illinois; South Suburban Housing Center inHomewood, Illinois; Greater New OrleansFair Housing Action Center in New Orleans,Louisiana; Denver Metro Fair HousingCenter in Aurora, Colorado; Fair HousingCenter of West Michigan in Grand Rapids,Michigan; Housing Opportunities Made

Equal (HOME) of Virginia in Richmond, Virginia; Connecticut Fair Housing Center inHartford, Connecticut; Fair Housing Centerof Central Indiana in Indianapolis, Indiana;Metropolitan Milwaukee Fair HousingCouncil in Milwaukee, Wisconsin; The FairHousing Continuum in Melbourne, Florida;Toledo Fair Housing Center in Toledo, Ohio;and the Fair Housing Center of Marin in SanRafael, California.

This report documents the findings ofthese investigations and outlines clearrecommendations for policy makers,community stakeholders, banks, investors,and servicers to eliminate the disparitiesin the treatment of REO homes. Everyonedeserves a chance to build wealth and stability

of REOs inCommunities of Colorhad substantial trash

compared to only

47.5%

in predominantly

White

communities

22%



6

Dallas, T

Denver, COOakland, CA

Richmond, CA

San Diego, CA

Vallejo, CA

Tucson, AZ

Metropolitan Areas Where REO

Las Vegas, NV Kans



7

Chicago, IL

Washington, DC

Prince George’s County

Memphis, TN

Atlanta, GA

Baltimore, MD

Baton Rouge, LA

Charleston, SC

Dayton, OH

Indianapolis, IN

New Orleans, LA

Miami, FL

Orlando, FL

Richmond, VA

Hampton Roads, VA

Toledo, OH

vestigations Were Conducted

New Haven, CT

Philadelphia, PA

Grand Rapids, MIlwaukee, WI

Each star represents one Metropolitan Statistical Area. Often an MSA

included several cities and jurisdictions; for example, in the Chicago

MSA data included REO properties from non-White communities in:

Aurora, Chicago, Country Club Hills, Dolton, Elgin, Evanston, Harvey,

Hazel Crest, Matteson, North Chicago, Skokie, and Waukegan.

ary, IN

O/KS

Muskegon, MI



8

through homeownership and to do so inneighborhoods free of under-maintainedproperties and the associated increasedhealth and safety concerns and propertyvalue instability. An industry-wide change inREO management and disposition practices

is essential to ensure a fair and equal recoveryof all neighborhoods across the country,regardless of their racial or ethnic composition.

SECTION 2: BACKGROUND

Due to the unprecedented rate of foreclosureover the last decade, recent research hashighlighted and documented in depththe harmful effects of foreclosures onthe surrounding neighbors. Properties

located on the same block of a foreclosureautomatically suffer from dips in their ownproperty value, and vacant properties thatare under-maintained or remain vacant andon the market for an extended amount of timeonly amplify these losses.5 These spillovereffects on neighbors and neighborhoods arean increasingly important civil rights issue asforeclosures continue to be disproportionatelyconcentrated in African-American, Latino,

and immigrant communities. The wealthand health of neighborhoods are suffering.

Poorly Maintained REO PropertiesStrip Wealth from Communities ofColor

Communities across the country will continueto feel the effects of the foreclosure crisis inthe coming years, but none more acutelythan those in which the residents are primarily

African-American and Latino. Research andnumerous legal actions have established thatsubprime loans, loans that were much morelikely to experience default and foreclosure,were deliberately marketed and originated

5 Han, Hye-Sung, “The Impact of Abandoned Propertieson Nearby Property Values,” Housing Policy Debate,Routledge, 2013.

to homeowners of color. The Center forResponsible Lending (CRL) reported thatfor mortgages originated between 2004and 2008, African-American and Latinoborrowers were nearly twice as likely asWhite borrowers to have one or more “high

risk” features or conditions in their loans.Such features included higher interest rates,option Adjustable Rate Mortgages (ARMs), ora prepayment penalty.6 Even after controllingfor factors such as credit score and income,

African American and Latino home buyerswere 80 percent and 70 percent more likelyrespectively to receive a subprime loan thanWhite home buyers.7

As a result of these predatory and

discriminatory actions by large banks, theeffects of the foreclosure crisis are moreheavily concentrated in neighborhoods wherethe majority of the residents are African-

American or Latino. Estimates from 2012are that the average American householdlost $1,700 in just one year as a result of

6 Center for Responsible Lending, “Lost Ground, 2011:Disparities in Mortgage Lending and Foreclosures,”November 17, 2011, http://www.responsiblelending.org/mortgage-lending/research-analysis/lost-ground-2011.html.

7 Alliance For A Just Society, “Wasted Wealth: How the WallStreet Crash Continues to Stall Economic Recovery andDeepen Racial Inequality in America,” May 2013, http://allianceforajustsociety.org/wp-content/uploads/2013/05/Wasted.Wealth_NATIONAL.pdf.

Prior to the foreclosure crisis,

African-American home buyers were

80% more likely to receive a subprime

loan when compared toWhite home buyers



9

foreclosures alone. For neighborhoods thathad majority non-White households, thewealth loss increased to an average $2,200.8 Household wealth loss in general showedeven starker trends for communities of colorpost-foreclosure crisis; from 2005 to 2009

White households lost 16 percent of their networth while African American householdslost 53 percent and Latino households lost66 percent.9

Because African American and Latinohomeowners disproportionately facedadverse actions on their loans, theneighborhoods and communities they livedin disproportionately felt the impact. CRL’smost recent estimates are that families

affected by nearby foreclosures have lost orwill lose a total of 8.8 percent of their homevalues. For residents in African Americanor Latino communities, that number nearlydoubles to a staggering 16 percent of theirhome value. The same study finds that overone-half of the spillover loss from nearbyforeclosures has or will occur in non-Whitecommunities because of the disproportionateconcentration of foreclosures and resultingREOs in these communities. The total lossamounts to about $1.1 trillion in home equitystripped from communities of color alone. 10

Poor maintenance coupled with the resultingextended time an REO spends vacant andon the market also has a real effect on thesurrounding neighborhood beyond just theeffect of a regular foreclosure. A recent studybased in Baltimore, MD, documents that thelonger an unoccupied property remained

8 Ibid.

9 Pew Research Center, “Wealth Gaps Rise to RecordHighs Between Whites, Blacks and Hispanics,” July 26,2011, http://www.pewsocialtrends.org/files/2011/07/SDT-Wealth-Report_7-26-11_FINAL.pdf.

10 Center for Responsible Lending, “2013: Update: TheSpillover Effects of Foreclosures,” August 19, 2013, http://www.responsiblelending.org/mortgage-lending/research-analysis/2013-crl-research-update-foreclosure-spillover-effects-final-aug-19-docx.pdf.

unmaintained, the more amplified its impactbecame on neighboring property values,even when localized foreclosure and marketactivity were accounted for.11 Neighbors ofbank-owned properties have been powerlessto stop the depreciation of their own property

values, even if they invest in and care fortheir own properties. Another recent study ofMaryland’s housing market analysis showedthat Prince George’s County lost the mosthome equity out of any Maryland countyafter the foreclosure crisis in 2007, and by2009 had lost a total of $13 billion.12 Thisis especially troubling as Prince George’sCounty, included in this report’s investigation,was 85.1 percent non-White as of the 2010Census.

Poorly Maintained REO Properties Are Costly to Local Municipalities

Wealth loss to neighboring families is notthe only costly outcome that results frompoorly maintained foreclosed properties.Local municipalities are also forced toshoulder heavy costs for each vacant, under-maintained property within their jurisdiction,and these costs can increase exponentiallywhen the particular local jurisdiction has ahigh rate of foreclosures.

When banks neglect their assets, many ofthe related expenses become the burden ofthe local government. Such costs can addup quickly; according to the Government

Accountability Office (GAO) report 12-34,the city of Detroit, MI, estimated spending$1.4 million to board and secure 6,000

properties in 2010 alone.13 Similarly,

11 Han, Hye-Sun, “The Impact of Abandoned Propertieson Nearby Property Values,” Housing Policy Debate,Routledge, 2013.

12 Maryland’s 2010-2015 Consolidated Plan - HousingMarket Analysis, http://www.dhcd.state.md.us/Website/ About/Pu bl ic Info/Pu bl ica t ions/Do cuments/2010 -2015housingmarket.pdf.

13 U.S. Government Accountability Office, “VacantProperties: Growing Number Increases Communities’ Costs



10

a Woodstock Institute study from 2005documents that the amount spent by localgovernments on a vacant and unmaintainedproperty averaged $5,358 per property peryear.14

Additionally, demolition costs becomenecessary when much of the foreclosedhousing stock is uninhabitable or too costlyto renovate for another owner occupant.The City of Baltimore, which has a largestock of foreclosed row houses, estimated itwould cost between $13,000 and $40,000to demolish each row house.15 On top ofthese documented costs of demolition andmaintenance come other administrative

expenses related to REO properties, suchas managing vacant property registriesand the increased dispatching of police orfire services in response to 911 calls, codeenforcement, and other public safety issues.

While expenses pile up due to the increaseddemand on city resources, tax revenues alsosuffer as a result of depreciating propertyvalues. The National League of Citiesreported that cities continue to feel the

downturn in real estate values and havedocumented that property tax revenuedeclined for the third year in a row with adecrease of 2.1 percent in 2012. CuyahogaCounty, which includes Cleveland, OH,within its borders, has documented a lossof over $46 million in tax revenue due toREO properties.16 This lost revenue limits

and Challenges,” November 4, 2011, http://www.gao.gov/assets/590/586089.pdf.

14 Apgar, William, and Mark Duda, “The Municipal Cost

of Foreclosures: A Chicago Case Study,” HomeownershipPreservation Foundation Housing Finance PolicyResearch Paper, February 27, 2005, http://www.nw.org/network/neighborworksProgs/foreclosuresolutionsOLD/documents/2005Apgar-DudaStudy-FullVersion.pdf.

15 U.S. Government Accountability Office, “VacantProperties: Growing Number Increases Communities’Costs and Challenges,” November 4, 2011, http://www.gao.gov/assets/590/586089.pdf.

16 Ford, Frank and April Hirsh, “The Role of Investors

the city’s ability to provide vital services toits residents, including good quality schools,police and fire protection, water service, andgarbage pick-up.

In May of 2011, the City of Los Angeles filed

a lawsuit against Deutsche Bank allegingthat the bank failed to maintain hundredsof its foreclosed homes in low-incomeneighborhoods and did not comply withlocal municipal code enforcement rules. TheCity of L.A. argued that Deutsche Bank’scode enforcement violations of $2,500 perviolation per day translated to hundredsof millions of dollars in unpaid fines tothe city. In July of 2012, the City of L.A.

filed a similar lawsuit against U.S. Bancorpalleging the same claim. Both DeutscheBank and U.S. Bancorp argued that theywere not, in fact, responsible for the neglect,but instead that their loan servicers were theactual contractual parties responsible formaintenance of the foreclosure properties.The Deutsche Bank lawsuit was settledin June of 2013, and Deutsche Bankcollectively arranged for its loan servicers topay the $10 million dollar civil penalty.17

Poorly Maintained REO PropertiesCreate Health and Safety Concernsfor Communities

Vacant REO properties that are under-maintained also have significant, negativeoutcomes for neighborhoods in the arena ofhealth and safety. Recent research publishedby the American Heart Association suggeststhat living near a foreclosure not onlyaffects neighboring property values but

in the One-to-Three Family REO Market: The Case ofCleveland,” December 16, 2013, http://www.jchs.harvard.edu/sites/jchs.harvard.edu/files/w13-12_cleveland_0.pdf.

17 Pettersson, Edvard, “Deutsche Bank Settles Los AngelesSuit over “Slumlord” Claims.” Business Week, June 19,2013. http://www.businessweek.com/news/2013-06-18/deutsche-bank-settles-los-angeles-slumlord-suit-allegations.



11

also undermines the health of the neighborsthemselves, as proximity to a foreclosureincreases a person’s chance of developinghigh blood pressure. The study alsospecifically found that homes that are quickly

purchased do not appear to lead to a risein blood pressure, but homes that becomeREOs and remain vacant do contribute to anincrease.18 This study was conducted usingdata from a middle income, predominantlyWhite neighborhood, and one can onlyassume that the effects would be compoundedin communities of color, where a higherconcentration of REOs in poorer states ofmaintenance are located.

Properties that are vacant and boardedup increase a sense of social isolationand anxiety for the residents living in thoseneighborhoods. The physical deteriorationof a neighborhood associated with a highnumber of bank-owned, neglected vacantproperties also leads to a stigmatization of theneighborhood that further isolates residentsand allows for a more rapid decline of thecommunity.

High foreclosure rates are also associatedwith increased criminal activity and arson.Dan Immergluck’s 2005 study shows thatwith every 1 percentage point increase in acensus tract’s foreclosure rate, violent crimesincrease by 2.33 percent, with all other thingsbeing equal. He also suggests a correlationbetween foreclosures and increased propertycrime.19 The “broken windows theory,”which essentially states that one broken

18 ElBoghdady, Dina, “Foreclosures may raise neighbors’blood pressure, study finds,” Washington Post, May12, 2014, http://www.washingtonpost.com/business/economy/study-foreclosures-may-raise-neighbors-blood-pressure/2014/05/12/5f519952-da03-11e3-bda1-9b46b2066796_story.html.

19 Immergluck, Dan, “The Impact of Single-FamilyMortgage Foreclosures on Neighborhood Crime,” Vol.21No.6 in Housing Studies, 851-866, http://www.prism.gatech.edu/~di17/HousingStudies.pdf.

window or other sign of abandonment willencourage further disinvestment and signs ofabandonment, has long been an explanationfor increases in criminal behavior in areaswith many vacancies.20 These outcomes are

extremely harmful to the stability and senseof community in a neighborhood. Whenresidents feel unsafe walking on a streetwith poorly maintained REO vacancies, itlimits their pedestrian amenity and generalwell being. Some of the REOs visited in thisinvestigation have become the homes wherepeople party on the weekends or engage inillicit activities or where squatters take over.

One REO in a Latino neighborhood, owned

by Bank of America and investigated by theDenver Metro Fair Housing Center, has beenthe site of many parties; neighbors told fairhousing investigators that the police visitedseveral times a week. One after-prom partyat the property had over 100 teenagers, andthe police had to block off the entire street toclear out the party. Fair housing investigatorshave documented beer and liquor bottles leftat REOs.

Figure 1: Broken beer bottles at an REO in Denver, CO.

Vacant properties also present health risks forthe communities in which they are located.

20 U.S. Department of Housing and Urban Development,“Vacant and Abandoned Properties: Turning Liabilities into Assets,” April 10, 2014, http://www.huduser.org/portal/periodicals/em/EM_Newsletter_winter_2014.pdf.



12

Accidental injuries from fires, as well asinjuries related to unsecure and unstablestructures, may occur. REOs that appear tobe abandoned attract illegal dumping, rodentand insect infestations, and deterioration oflead paint which are all extremely hazardous

to neighboring families and make the homehard to market to owner-occupant buyers.

Many factors influence health and safetyin homes, including structural and safetyaspects of the home; quality of indoor air;water quality; exposure to chemicals; residentbehavior; and the house’s immediatesurroundings. A home’s structural and safetyfeatures can increase risk for injuries, elevate

blood lead levels, and exacerbate otherconditions. Poor indoor air quality contributesto asthma, cancers, cardiovascular disease,and other illnesses. Poor water quality canlead to gastrointestinal illness and a rangeof other conditions, including neurologicaleffects and cancer. Standing water inuncovered and unmaintained pools can bea breeding ground for mosquitoes carryingdiseases. All of these issues are influencedboth by the physical environment of the home

and by the behavior of the people living inthe home.21

Figure 2: Dead rat found

at an REO in Richmond, CA.

21 U.S. Department of Health and Human Services, “TheSurgeon General’s Call to Action To Promote HealthyHomes,” 2009.

Figure 3: Standing water and mold at an

REO property in Memphis, TN.

Poorly Marketed REO PropertiesResult in High Numbers of InvestorPurchases

In recent years, investors ranging from mom-and-pop small businesses to large WallStreet investment firms have been buyingforeclosures in targeted communities. Whileresponsible investors undoubtedly have thepotential to assist in the housing recoveryby renovating homes and providing newrental or buyer opportunities, their presenceis all too often damaging in neighborhoodsthat were once vibrant and stable, with highhomeownership rates. Another culprit in thissituation is a bank or GSE that sells these REO

homes in bulk sales or fails to even bid onits own homes at auction. Because investorsare purchasing large portions of the housingmarket and banks are paving the way for themto do so, communities with historically highhomeownership rates are now transitioninginto high rental communities. Often,communities of color are hit the hardest ashomeownership constitutes a larger portionof an African American or Latino’s familywealth portfolio when compared to a White

household.22

Investors of all sizes and with all sorts ofpractices and patterns have taken advantage22 Institute on Assets and Social Policy, “The Roots of theWidening Racial Wealth Gap: Explaining the Black-WhiteEconomic Divide,” February 2013, http://iasp.brandeis.edu/pdfs/Author/shapiro-thomas-m/racialwealthgapbrief.pdf.



13

of the large number of foreclosures availableon today’s housing market. However, forthe first time institutional investors and largereal estate brokerage firms are now enteringthe market in a substantial way. Wall Streetcreated the rental-backed security which isthe investment tool to fund these bulk REOpurchases. These investors, whose purchaseshave been targeted in large metropolitanareas, have spent more than $17 billion inrecent years on foreclosed properties. Theselarge investors generally buy properties enmasse and hold them as long-term rentalproperties. Many also rent the propertieswith the hopes that the property values willrecover and they will then be able to sell

them for a large profit in several years. Suchinvestors have bought up large portions ofthe REO inventory in Miami, Phoenix, Las

Vegas, metropolitan Atlanta and California.To accumulate a large inventory of REOsin a specific market, the large firms hireindividuals to purchase the homes at auctionfor cash. The Wall Street Journal reported thatinvestors study thousands of to-be auctionedproperties and conduct price comparisons todetermine the highest price they should pay

to still make a profit.23 Often times theseinvestors end up purchasing the home forfar less than their maximum allotted bid, andmany homes sell far below the market valueor mortgage balance because at foreclosureproceedings banks are not bidding on theproperties for which they have issued loans.

Some investors are also following theirtraditional behavior by “flipping” homes—

buying properties, doing minor rehabilitationand selling them quickly for a profit. Smalland individual investors were recorded aspurchasing 66 percent of all REO propertiesin Miami-Dade County. And in Oakland,

23 Whelan, Robbie, “Firms Flock to Foreclosure Auctions,”The Wall Street Journal, September 12, 2012, http://online.wsj.com/news/articles/SB10000872396390443696604577644700448760254.

investors were responsible for buying 42percent of the REO market from 2007 to2011. Research suggests that whetherinvestors buy foreclosures and flip them orhold on to them for undisclosed amounts oftime, they often soon realize that they willnot turn a profit. These properties are thenabandoned and quickly become vacant,blighted eyesores for the community.24

In all of the above scenarios, high numbersof investor purchases in a neighborhood canlead to higher rates of property abandonmentand deterioration of the properties by allowingthem to either sit vacant, failing to renovatethe home or by renting the home without

bringing it up to code. Coordinated buyingand selling of properties by large investmentcompanies can also cause increased marketvolatility.25 In Atlanta, census tracts withhigh investor activity also tend to be heavily

African-American, and these same tracts havea high number of purchases from mediumand large sized investment companies.26

NFHA’s pilot review of a sample of propertiesin Prince George’s County, Maryland,

shows that poorly maintained propertieswere much more likely to be purchased byan investor than an owner occupant. As aresult, because poorly maintained propertiesare more heavily concentrated in Latinoand African-American communities, theseneighborhoods of color that formerly hadhigh owner-occupancy rates are at risk ofbecoming investor communities.27 24 Edelman, Sarah, “Cash for Homes: Policy Implicationsof an Investor-Led Housing Recovery Center for American

Progress,” September 5, 2013, http://americanprogress.org/issues/housing/report/2013/09/05/73471/cash-for-homes-policy-implications-of-an-investor-led-housing-recovery/.

25 Ibid.

26 Immergluck, Dan, “The Role of Investors in the SingleFamily Market in Distressed Neighborhoods: The Case of Atlanta,” February 2013, http://www.jchs.harvard.edu/sites/jchs.harvard.edu/files/w13-2_immergluck.pdf.

27 National Fair Housing Alliance, “The Banks Are Back –



14

WHAT IF THIS WERE YOUR NEIGHBORHOOD?Many of the REO properties that NFHA and its members evaluated were within close proximity to each other. As detailedection 2, the presence of just one foreclosure in a neighborhood will have lasting effects on the neighboring homeownnd their property values, the neighborhood as a whole, and the local municipality in which it falls. When multireclosures exist in a neighborhood these effects are intensified. In the example below there were four poorly maintain

EO properties in a predominantly Latino neighborhood in Oakland, CA; all evaluated within one day of each other, theur bank-owned homes spread the negative effects of a poorly maintained REO to the entire community and beyon



15



16

REO Maintenance Overview

Once foreclosure proceedings arecompleted and the property becomesreal estate owned by a bank, the FederalHousing Administration (FHA), Fannie Mae

or Freddie Mac, each corporation utilizes itsown system for maintaining and selling anREO. Some lenders only act as trustees forthe properties; they delegate maintenanceand marketing responsibilities to the loanservicers listed in their Pooling and Service

Agreements. Some contract with a real estatebroker who is tasked with the maintenance,marketing, and sale of the home. Thebroker may be required to secure the REO,assess the value of the property, subcontractwith a preservation maintenance provider,and develop a marketing strategy for sellingthe REO.

The real estate broker or a preservationvendor may also be responsible for requestinginterior and exterior repairs. More oftenthan not, these brokers/vendors do not haveoffices in the communities where the REOsare located which can be problematic when

it comes to determining the proper pricing,marketing, and maintenance of the REO.

Our Neighborhoods Are Not,” April 12, 2012, http://www.nationalfairhousing.org/Portals/33/Banks%20are%20Back%20Final%2012.3.2012.pdf.

Some lenders also contract with nationwideasset managers or field service vendorswho make the decisions about repairs andbecome the final arbitrator regarding allrepairs.

Though the specific models of maintenanceand marketing may vary, routine yardmaintenance, securing of the property,trash removal, and cleaning are generallycontracted to a property maintenance andpreservation company or asset managementcompany. This contractor may be a nationalcompany that subcontracts at the regional,state, or local level, or may be a localsmall business that works directly within thelender’s network of vendors. The specificrequirements for these vendors differ bylender, but typically these vendors areexpected to visit the property weekly andconduct maintenance to ensure that theREO property complies with local buildingand public safety and health standards.

REO properties that are not properlymaintained by these vendors are subject to ahost of harmful effects. A home with unsecured

doors, broken windows, overgrown grass, ortrash around the property signals to vandalsand looters that the property is abandonedand makes the home and neighborhood atarget for illegal activity. In addition, homes

Delinquencybegins/lossmitigation

Job loss, hardship,or predatory loan

becomes tooburdensome for

homeowner

90 days

ForeclosureInitiated

Foreclosure judgment

Foreclosure sale

Redemptionperiod

(varies by state)

128 days 63 days 88 days

Propertyrepossessed by

Bank

REO



17

that appear abandoned and look unsightlydue to poor maintenance will often deterreal estate agents from showing the REOto homebuyers; consequently, the poor

condition of the home reduces the poolof potential owner-occupant buyers andnegatively affects the price of the home.



18

Poor REO Pricing and MarketingPractices by Banks HarmNeighborhoods

A bank’s failure to adequately maintainan REO property may be due to a false

perception of the house’s actual value orthe bank’s erroneous assumptions abouta potential return on its investment. Theseimpressions could be based upon aninaccurate appraisal of the property’s marketvalue and/or faulty perceptions about theneighborhood in which the property islocated. These impressions could also bethe result of discriminatory factors or bankpolicies that on paper are neutral but whichhave a discriminatory impact when applied to

properties in communities of color.

An REO property is typically priced using aBroker Price Opinion (BPO) to determine thevalue of the home before it is listed for sale.Depending upon state law requirements,either an appraiser or a real estate agentconducts the BPO. An Internal BPO examinesthe inside of the home, which is viewed andphotographed, and a Drive-by BPO includes

photographs of the exterior and estimatesabout the interior features.

A Drive-by BPO might be appropriate for homesin relatively newer subdivisions. However, aDrive-by BPO lessens the likelihood that theestimated value will be accurate, especiallyin cases where renovations or improvementshave been made to a home located in anolder neighborhood. An internal BPO or fullappraisal gives a bank the best estimate of a

property’s actual condition and value. TheFederal Housing Administration requires afull appraisal on all of its REO homes.

Banks may also determine the type or extentof maintenance actions for a property basedon the bank’s perceived return on investment.In other words, some banks weigh the cost

of any maintenance or repair against theprojected income the bank will receive fromthe sale of the property. Moreover, somebanks may even set a lower maintenancestandard for properties the bank presumeswill be sold to an investor. The presumption

of whether or not a property will be sold to aninvestor can be based on the trend of previousREO sales in the neighborhood. Turning aformerly owner-occupant neighborhood intoan investor-owned neighborhood can be theresult of poor maintenance and marketing.The remaining homeowners suffer seriousloss of value to their homes and problemsthat arise with absentee landlords.

Many banks evaluate the performance of

their brokers based on a set list of successmeasures, one of which is the averagetime an REO spends on the market. Mostbanks reduce the price of an REO every 20to 30 days, so if the home starts out with alow appraisal, the value of the home justcontinues to drop. Since a broker is evaluatedby “days on the market,” these practicesincentivize brokers to encourage an investorpurchase over an owner occupant because

investors make cash offers which expedite thesales and shorten the time on market. Thismisalignment of broker incentives results inlowering the home’s value, discouragingowner-occupant sales and lowering propertyvalues in the neighborhood.

Lastly, while all foreclosures go through theauction process, more and more lendersare not even bidding on the foreclosureand allowing properties to sell at auction

at a price far below the mortgage balance.This tactic by banks removes the propertyfrom the REO sales channel and results ininvestor purchases at prices below what themarket will sustain. This practice hurts theformer owner who may be responsible forpaying the difference between the auctionprice and mortgage balance, and it has a



19

direct impact on real estate agents’ abilityto make a living by listing and selling REOs.In the past, investors have been wary ofthese sorts of purchases because access tothe properties is restricted before auctionand professional inspections are impossible

at that stage. However, some investorshave found ways to view the inside of theproperty prior to the sale and have bypassedthis obstacle.28 Because they acquire theseforeclosed properties at such an early stage,often without inspections, and at such a lowprice, some of these investors are more likelyto abandon properties that need renovation.

Figure 5: An REO in Waukegan, IL

with auction signage.

REO Maintenance and the Application of the Fair Housing Act

President Lyndon B. Johnson signed thefederal Fair Housing Act into law on April11, 1968, one week after the assassinationof Dr. Martin Luther King, Jr. In 1988,President Ronald Reagan signed the FairHousing Amendments Act, which providedthe Department of Housing and UrbanDevelopment (HUD) and the Departmentof Justice with a much-needed federal

28 Immergluck, Dan, “The Role of investors in the Single-Family Market in Distressed Neighborhoods: The Case of Atlanta,” February 2013, http://www.jchs.harvard.edu/sites/jchs.harvard.edu/files/w13-2_immergluck.pdf.

enforcement mechanism.

The Fair Housing Act has two goals: toeliminate housing discrimination and topromote residential integration. HUD’sregulations interpreting the Fair Housing Act

state:

It shall be unlawful because of race, color,religion, national origin, sex, familial status,or disability to restrict or attempt to restrictthe choices of a person by word or conductin seeking, negotiating for, buying or rentinga dwelling so as to perpetuate segregatedhousing patterns, or to discourage or obstructchoices in a community, neighborhood ordevelopment.

The differential maintenance of REOproperties based on the racial compositionof neighborhoods is a violation of the FairHousing Act.

• HUD’s regulations clearly state that“failing or delaying maintenance orrepairs of sale or rental dwellingsbecause of race” is a prohibited actionunder the Fair Housing Act.

• Steering by real estate agents basedon neighborhood racial compositionis illegal, and other behavior in thehousing sales or rental market thatoperates to discourage potential buyersfrom purchasing or renting homes inminority neighborhoods, such as failingto adequately maintain properties inminority neighborhoods, can also violatethe Act.29

• Under the Fair Housing Act, it isunlawful to “make unavailable or deny”housing to any person because of

29 Gladstone Realtors v. Village. of Bellwood, 441 U.S.91, 94 (1979); see also Zuch v. Hussey, 394 F. Supp. 1028,1047 (E.D. Mich. 1975) aff’d and remanded by 547 F.2d1168 (6th Cir. 1977).



20

race.30 Damage to REOs resulting frompoor maintenance may make homes“unavailable” by creating obstacles tothe sale of those properties, whether byrendering homes uninhabitable, implicitlysending a message that the home is not

on the market, or making it more difficultfor buyers to secure financing.

• In addition, actions that perpetuatehousing segregation violate the FairHousing Act.31 Discrimination inthe maintenance of REO propertiesperpetuates segregation by discouragingdiverse buyers from purchasing propertyin affected neighborhoods of color.

Additionally, poorly maintained REOs

lower neighboring home values, making itmore difficult for people of color and otherhomeowners living the neighborhoods tosell their homes and move to other areas.

The Fair Housing Act establishes broad liabilityfor violations. The term “person” in the Act isdefined to include “one or more individuals,corporations, partnerships, associations,labor organizations, legal representatives,mutual companies, joint-stock companies,

trusts, unincorporated organizations, trustees,trustees in cases under Title 11, receivers, andfiduciaries.32 Under this broad definition andthe fact that the courts have held that agencyprinciples apply to actions under the Act, partiesthat may be held liable for discriminatory REOmaintenance and marketing practices includebanks, GSEs, trustees, and those parties thatcontract for the servicing and marketing of theREOs. Furthermore, because standing under

the Act is held to be as broad as Article III ofthe Constitution will allow, potential aggrievedparties for the identified discriminatory REOpractices may include the residents living incommunities of color, cities that have been

30 42 U.S.C. § 3604.

31 Huntington Branch, N.A.A.C.P. v. Town of Huntington,844 F.2d 926, 937-38 (2d Cir. 1988).

32 42 U.S.C. § 3602(d).

hard hit by these discriminatory practices, andthe fair housing offices that are conductingthese investigations.33

The Fair Housing Act specifically names trustsand trustees in its definition of a “person”

covered under the Act. Many lenders holdthe title to an REO property as a securitizationtrustee and argue that the servicer listed intheir Pooling and Servicing Agreement, orcontract dictating the management of theirsecuritized loan, is solely responsible forany discriminatory behavior or conduct thatviolates the Act. While the servicer does infact service the loan, collect payments onthe loan, and oversee maintenance of theproperty, it does so for the benefit of the

lender and is effectively acting as the lender’sagent. A lender cannot change the legalobligations it has under the Fair Housing Act;it is responsible for items such as real estatetaxes, zoning and code compliance, nuisanceavoidance and abatement, and compliancewith all other federal and state laws imposingduties on landowners. This would includethe responsibility of non-discriminatorymaintenance and marketing of REO properties

across all communities, regardless of race ornational origin.

Finally, all federal agencies and their granteesassociated in any way with housing andcommunity development have a specialobligation to further the purposes of thefederal Fair Housing Act. The law also coverspolicies and practices that have a disparateimpact on protected classes.

This obligation is defined in Section 808(d) ofthe Fair Housing Act:

All executive departments and agenciesshall administer their programs and activities

33 See, e.g., Havens Realty Corp. v. Coleman, 455 U.S.363, 372 (1982) (citing Gladstone Realtors v. Village ofBellwood, 441 U.S. 91, 103 n.9 (1979)).



21

relating to housing and urban development(including any Federal agency havingregulatory or supervisory authority overfinancial institutions) in a manner affirmativelyto further the purposes of this subchapter andshall cooperate with the Secretary [of Housing

and Urban Development] to further suchpurposes.34 (emphasis added)

Executive Orders and other provisions ofthe Fair Housing Act related to affirmativelyfurthering fair housing provide additionalguidance on this obligation.35 In this context,the need to address and ameliorate the poormaintenance and marketing of REO propertiesin communities of color is of paramountimportance to the resurgence of communities

already devastated by the foreclosurecrisis. Poorly maintained REO propertiesoften result in costly expenditures by citiesto mitigate public safety hazards and otherrelated concerns in these neighborhoods. Byneglecting to properly maintain and marketREO properties, particularly in communities ofcolor where REOs are heavily concentrated,banks, trustees, investors, and servicers extendthe amount of time a property remains vacant

and becomes a source of blight in cities acrossthe nation.

SECTION 3: METHODOLOGY

NFHA and its members investigated REOmaintenance practices in 29 metropolitanareas, selecting zip codes in which the

34 42 U.S.C. § 3608(d).

35 Section 805 of the Fair Housing Act lays the groundwork

for this mandate by detailing discrimination in residentialreal estate-related transactions; Section 808 of the Act spellsout the responsibility of the Secretary of Housing and UrbanDevelopment (HUD) to administer the Act, and the Act’sapplication to other federal agencies; and Executive Order11063, signed on November 20, 1962, and ExecutiveOrder 12892, signed on January 17, 1994, together statethe responsibilities of all federal agencies to administer theirprograms in a manner that affirmatively furthers fair housingand clarify what is meant by programs and activities relatingto housing and urban development.

majority of the residents were White, Non-Hispanic, Latino, African-American, or wherethe majority was a combination of non-White, Latino and African-American. Theseneighborhoods were also selected becausetheir recent foreclosure rates were high in

comparison to other neighborhoods in thesame metropolitan area.

Once the target zip codes were identified, dataproviding the addresses of REO properties,as well as the banks or GSEs listed as theowners of the homes, was collected in eachof the areas. These lists were compiled usinga bank or GSE’s own website, county propertyrecords, records kept by the clerk of courts,RealtyTrac, vacant property registries, auction

websites, and other database sources. Asproperty records are often not updated formonths after a transaction is completed,records were also reviewed several monthsafter the investigation to ensure sale had notoccurred and simply not been recorded at thetime of investigation.

REO properties that were either owned byseveral major lenders or were owned or

overseen by FHA and the GSEs were thesubject of the investigation. Because this datawas collected for enforcement purposes, itis not limited to a research methodology ofrandom sampling of the REO properties ineach neighborhood. Within each zip code, allREO properties owned by the lenders selectedwere investigated and evaluated. However, ifinvestigators arrived at a property and foundit to be clearly occupied, the property was notevaluated. Similarly, if a property was actively

undergoing some type of repair or renovationat the time of the visit, the property was alsonot evaluated.

Between April 2012 and December 2013,NFHA staff, along with staff from partnerorganizations, visited more than 2,400single-family and townhome properties. Staff



22

evaluated each property using a checklistthat included over 30 factors, such as curbappeal, structure, signage and occupancy,paint and siding, gutters, water damage,and utilities.36 Evaluators answered “yes”or “no” to indicate whether each of these

factors was or was not present on theproperty, and took pictures of the propertyand surrounding homes. For example, nextto “trash” on the score sheet, the evaluatorwould mark “yes” if there was a visibleamount of trash on the REO property, whichwould then translate into a deduction fromthe overall score. A lack of certain criteria,like a missing “For Sale” sign, also wouldconstitute a deduction. In some cases an

REO might have several instances of thesame deficit, such as multiple boardedwindows or multiple hanging gutters, but36 This checklist has been in use by NFHA and itspartners since 2010 and matches up almost exactly withthe checklists used by the GSEs and several banks whohave shared their practices with NFHA. It has also beenadopted by at least one bank since NFHA published itsmethodology.

evaluators would only mark “yes” once.Table 1 shows an overview of the scoringcategories.

To ensure consistency, investigators weregiven a thorough training with examples

and field training. They also utilized aglossary of terminology developed by NFHAand its partners at the beginning of thisinvestigation with pictures and descriptionsto illustrate various examples that wouldconstitute a “yes” answer for each of thescoring components. The glossary also tookinto account and illustrated variations inseverity for some of the scoring criteria. Forexample, if a property had a small amount

of dead grass, it would receive a smallerdeduction than if 50 percent or more of thelawn was filled with dead grass. Similarly,the severity of invasive plants and mold ordiscoloration was also taken into accountwhen evaluating an REO property.

Curb Appeal Structure Signage &Occupancy

Paint &Siding

Gutters WaterDamage

Utilities

Trash

Mail Accumulated

OvergrownGrass/leaves

Overgrown/dead shrubbery

Dead Grass

Invasive Plants

Broken Mailbox

Unsecured orBroken Door

DamagedSteps orHandrails

Broken orBoardedWindows

DamagedRoof

DamagedFence

Holes

Wood rot

Trespassingor warningsigns

Marketed asdistressed

For Sale signmissing

Broken ordiscarded

signage

GraffitiPeeling orChippedPaint

DamagedSiding

Missing

Shutters

Missing orOut of Place

Broken orHanging

Obstructed

WaterDamage

Smallamount ofmold

Pervasive

mold

Exposed ortamperedwith



23

Investigators took photographs of the frontof the property, both sides of the property,and the back view of the property whenaccess was available. These photographswere taken regardless of whether there weredeficiencies documented, in order to show

the state of the REO maintenance at the timeof visit. Investigators also took photographsof the houses across the street and on bothsides of the subject REO. Documenting theneighboring properties allowed investigatorsto illustrate the REO in the context ofthe block and neighborhood where it islocated. It also provides evidence of apoorly maintained REO’s negative effect onoften well-maintained neighboring homes.

Several banks have adopted this practice ofphotographing neighboring homes so thattheir REO management teams have a betterunderstanding of the REO neighborhood toinform their decision-making about pricing,maintenance and repairs.

The data and pictures were uploaded into acentral database which was used to assigna score to the REO property. Each propertywas assigned a neighborhood designation

based on racial/ethnic makeup of theCensus Block Group in which the addresswas located. REO properties could fall intoone of four neighborhood designations:(1) African-American, (2) Latino, (3) White,or (4) predominantly non-White37. Boththe overall scores of each property, as wellas the scores for each individual categoryand subcategory, were then averaged andcompared.

Investigators evaluated the state of the REOproperty at the time of the visit. Accordingly,this investigation could not and did not takeinto account the condition of the propertyat the time of transfer to the bank. Theowner, who in this case is the bank or GSE,

37 A neighborhood’s race designation was calculatedusing 2010 Census data.

is responsible for securing the property,preserving and selling the asset, andmaintaining the lawn and exterior to meetlocal standards from the time the homebecomes vacant following the foreclosure.Therefore, the maintenance condition of

the home at any point when the property isvacant and bank-owned should be consistentbetween neighborhoods regardless of therace or ethnicity of the residents.

SECTION 4: FINDINGS

Since the beginning of these REOinvestigations, NFHA and its partnershave investigated 3,726 REO properties

owned and/or by managed by 16 differentlenders, FHA or GSEs. This report coversthe investigations completed from April2012 to December of 2013, totaling2,426 REO properties in African American,Latino, majority non-White, and Whitecommunities. Covering a total of 11banks, including FHA and Fannie Mae,across 29 metropolitan areas in 22 states,NFHA and its partners uncovered significantmaintenance and marketing disparities. The

companies covered in this dataset includeFannie Mae, (whose REO properties aremanaged by Safeguard, Asset ManagementSpecialists, and Cyprexx), Bank of America,US Bank, Deutsche Bank, and several othersthat cannot be named until investigationsare concluded and decisions about anyenforcement actions are made. This sectiondetails the overall investigation findings.

Total number of REO properties: 2,426• 895 African American• 326 Latino• 271 Majority non-White• 934 White



24

Overall Findings

REO properties in communities of color weremuch more likely to have a higher numberof maintenance and marketing deficiencies.

Communitiesof Color

White

Less than 5deficiencies

21.7% 43.2%

5 or moredeficiencies

78.3% 56.8%


32.0% 12.4%


6.4% 1.1%

Table 2: Nationwide statistics for overallmaintenance or marketing deficiency numbers

Overall, REO properties in Whitecommunities were found to be wellmaintained with minimal deficiency issues farmore often than those REOs in communities

of color. It was 2.0 times more likely thatREOs in White neighborhoods had lessthan five deficiencies compared to REOsin communities of color. It was much morecommon for REO properties in communitiesof color to have multiple deficiency issues,with five or more deficiencies occurring 1.4times more often, ten or more deficiencies2.6 times more often, and 15 or moredeficiencies 5.8 times more often than REOproperties in White communities.

In this report we documented significantdisparities based on the racial/ethniccomposition of the neighborhood where theREOs were located, such as:

- 28 out of 29 metropolitan areas (or96.6 percent) documented a significantaccumulation of trash at REOs in communitiesof color versus REOs in White communities;

- 27 out of 29 metropolitan areas (or 93.1

percent) documented a significant numberof unsecured or broken doors at REOs incommunities of color versus REOs in Whitecommunities; and,

- 26 out of 29 metropolitan areas (or 89.6percent) documented significantly moreunsecured, damaged, or broken windows atREOs in communities of color versus REOsin White communities.

43.2% of REO properties in

predominantly White

communities were well-

maintained while only


communities of color were well

maintained.



25

REO properties in communities of color weremore likely to have significant curb appeal,marketing, and structural issues than REOsin White communities.

Curb appeal plays a critical role in the

sale of any home, but particularly an REO.Curb appeal affects the list price, dayson the market, whether real estate agentsactively show the listing, the value at whichit is sold, and ultimately who decides topurchase the home. When an REO’s grassand shrubbery is manicured and maintainedand its yard is free of trash and debris,potential homebuyers are much more likelyto be interested in purchasing the home.Conversely, when an REO’s yard is overgrownand littered with trash, it is much more likelythat the property will sit vacant for weeks,months, or even years, and that an investorwill ultimately purchase the home insteadof an owner-occupant. Neglecting curbappeal on the part of the banks also harmsthe neighborhood as a whole, bringingdown property values and morale as well

as introducing health and safety hazardsto the community. NFHA and its membersfound that curb appeal issues, such as thepresence of trash, dead grass or overgrowngrass and shrubbery, and the accumulationof dead leaves, were documented with a

much higher frequency in communities ofcolor compared to communities where themajority of residents were White.

Analysis of the 2,426 REO propertiesacross the country also showed significantdisparities involving structural items at REOproperties in communities of color. Structuralissues, such as unsecured, broken, and/or boarded doors; damaged and unsafesteps or handrails; broken and/or boardedwindows; damaged roofs; damaged fences;unsecured holes; and serious wood rot, wereall found with a much higher frequency inREOs in communities of color. Even thoughthe majority of REOs in communities of colorwere located in middle income and workingclass neighborhoods, we documentedadditional structural issues much more

Figure 6 - This graph shows the percentage of REOs in communities of color thathad different levels of maintenance or marketing deficiencies compared to thosesame levels on REOs located communities that were predominantly White.

32.0%

6.4%

21.7%

78.3%

43.2%

56.8%

12.4%

1.1%

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

Well maintained (Fewer than 5

deficiencies)

Under maintained (5 or more

deficiencies)

Poorly maintained (10 or more

deficiencies)

Very poorly maintained (15 or

m ore deficiencies)

Communities of Color White



26

often, including graffiti on the exterior of thehome; peeling or chipped paint on outsidewalls, porch ceilings, and support beams;damaged siding; broken or hanging gutters;and exposed or damaged utilities such as

broken or missing A/C and electrical units,hanging wires and broken electrical fixtures.

Across the board, these structural issues thatare vital to the health and longevity of anREO property, as well as the health of theneighborhood in general, were found withmuch more frequency in communities ofcolor.

Poorly maintained REOs with unsecured

openings into the property invite trespassersand vandals as well as rodents, insects, cats,dogs and wildlife. Other structural issuescreate a deteriorating asset that decreases thesales price of the home meaning the bank willreceive less money, the former occupant maybe required to pay the difference betweenthe mortgage balance at foreclosure and theREO sale’s price and neighboring homes’will experience depreciated property values.Because REOs in communities of color muchmore frequently lacked a professional “forsale” sign on the property, the combinationof these deficiencies resulted in REOproperties appearing abandoned, blighted,unappealing, and unavailable to interestedhomebuyers. Instead, these discriminatorymaintenance and marketing issues foundin communities of color pave the way forinvestor purchases and continue to causegreat harm to neighborhoods, impeding their

recovery from the damage already inflictedby predatory lending practices that led to theforeclosure crisis.


communities of color had

substantial trash on the premises

while only


predominantly White

communities had the sameproblem

30% of REO properties in

communities of color had

unsecured or broken doors

while only


predominantly White

communities had the same

problem



27


Trash 47.5% 22.0%

Mail accumulated 19.2% 18.0%

Overgrown grass or leaves 32.8% 26.9%

Overgrown or dead

shrubbery

38.9% 33.3%

Dead grass 10-50% 22.5% 18.1%

Dead grass 50% or more 13.5% 5.8%

Invasive plants 10-50% 21.6% 18.8%

Invasive plants 50% or more 6.6% 3.6%

Broken mailbox 7.4% 6.0%

Unsecured or broken door 30.0% 12.7%

Damaged steps or handrails 16.6% 10.6%

Broken or boarded windows 47.1% 23.5%

Damaged roof 16.2% 9.0%

Damaged fence 35.9% 25.4%

Holes 23.9% 11.4%

Wood rot 28.0% 19.5%

Trespassing or warning signs 36.3% 36.4%

Marketed as distressed 4.7% 3.3%

For sale sign missing 55.1% 43.9%

Broken or discarded signage 3.4% 2.9%

Unauthorized occupancy 2.3% 0.0%

Graffiti 7.4% 1.7%

Peeling or chipped paint 55.6% 40.7%

Damage siding 38.1% 27.1%

Missing or damaged shutters 2.3% 1.8%

Missing or out of placegutters

19.0% 16.5%

Broken or hanging gutters 17.4% 11.9%

Obstructed gutters 17.8% 18.4%

Water damage 5.8% 3.2%

Small amount of mold 21.8% 19.9%

Pervasive mold 5.8% 3.6%

Exposed utilities 22.5% 8.4%

Table 3: National statistics for REO maintenance and marketing in 29 cities across the United States.



28

SNAPSHOT: MEMPHIS, TN

n May of 2013 NFHA investigated REO properties in the Memphis, Tennessee area. Upon scoring the propertybelow, located in a predominantly White community in Memphis, investigators documented that the propertyhad only minimal structural issues and excellent curb appeal. The REO was also properly marketed with aprofessional “For Sale” sign clearly visible in the front yard of the home. This property was sold less than a monthafter NFHA’s inspection to owner occupants.

Predominantely White Neighborhood



29

In May of 2013 NFHA also investigated the property below located in a predominantly Non-White community.Although it was marketed with a “For Sale” sign in the front yard, it had excessive overgrowth of grass, shrubbery,and invasive plants, boarded doors and windows, and multiple structural issues like holes in the structure amongothers. This home was sold a month and a half after NFHA’s visit to an investor.

Predominantely Non-White Neighborhood



30

SNAPSHOT: BALTIMORE, MD

n September of 2013 NFHA investigated the property below located in a predominantly White community inEllicott City, MD. While it was missing a “For Sale” sign, the home had a spotless yard that was well manicuredand maintained and had no structural issues.




31

n November of 2013 NFHA investigated the property below located in a predominantly African Americancommunity in Baltimore, MD. Investigators documented no “For Sale” sign, discarded “auction” signs, trashtrewn all over the property, overgrown grass and shrubbery, as well as mold and other issues.

Predominantely African American Neighborhood



32

SNAPSHOT: MILWAUKEE, WI

This REO in a predominantly White community in Milwaukee, WI was evaluated in September of 2012. It had aprofessional “For Sale sign” present, well manicured lawns, and no structural issues. It ultimately sold to owner-occupants.




33

This property was evaluated in August of 2012 and is located in a predominately African American neighborhoodn Milwaukee, WI. The REO had a substantial amount of trash on the premises as well as overgrown shrubbery,unsecured doors into the home, no “For Sale” sign marketing the home as available to homeowners, and manytructural issues such as boarded windows, peeling and chipped paint, damaged siding, and damaged gutters.

This home was purchased by investors.




34

SNAPSHOT: NEW ORLEANS, LA

nvestigators visited this REO in New Orleans, LA in November of 2013. Located in a predominately AfricanAmerican neighborhood, this REO had trash, overgrown shrubbery, invasive plants, boarded windows, holes,exposed utilities, and more. This home was listed for sale at $81,000 and ultimately sold for $70,000.Neighboring homes were in pristine condition and recent neighborhood sales prices were averaging $220,000.


nvestigators visited this REO in New Orleans, LA in November of 2013. Located in a predominatelyAfrican American neighborhood, this REO had trash, overgrown shrubbery, invasive plants,boarded windows, holes, exposed utilities, and more.



35

Neighbor of REO Neighbor of REO

Neighbor of REO

elow are the neighborhing homes of the REO property, all in pristine condition. The REO wassted for sale at $81,000 and ultimately sold for $70,000, while recent neighborhood salesrices were averaging $220,000.



36

22.5%

55.6%55.1%

23.9%

47.1%

30.0%

13.5%

38.9%

32.8%

47.5%

8.6%

40.6%

44.0%

11.3%

23.5%

12.8%

5.8%

33.3%

27.0%

22.0%

0%

10%

20%

30%

40%

50%

60%

Trash Overgrown

grass and

leaves

Overgrown or

dead

shrubbery

Dead grass -

50% or more

Unsecured or

broken doors

Damaged

windows

Holes For sale sign

missing

Peeling or

chipped paint

Exposed

utilities


Figure 7 - This graph shows the percentage of deficiencies at REO properties in communitiesof color and in predominantly White communities.

REO Disposition Outcomes

As noted previously in the report, poormaintenance of an REO property makes itsignificantly more likely to end up in the handsof an investor, rather than an owner-occupant.Investor purchased REOs often result in a numberof negative outcomes in the surrounding area,including a rapid decrease in property valuesand a higher risk of abandonment.

In order to get a better picture of how poormaintenance by banks lured investors toneighborhoods that formerly had high ratesof homeownership, NFHA reviewed propertyrecords to determine if properties that werepoorly maintained were more likely to sell toinvestors over owner-occupants. For NFHA’s2012 REO report property records of 90 REOsin both Prince George’s and Montgomery

Counties in Maryland were reviewed. Thereview revealed that properties in communitiesof color and properties that were maintainedpoorly were significantly more likely to havebeen sold to investors over owner-occupantsthan REOs located in White communities. Wefound that 59 percent of REO properties thatwere poorly maintained were sold to investors,

compared to only 36 percent of those that werewell maintained. Forty-six percent of the well-maintained properties were purchased by owner-occupants, while only 12 percent that werepoorly maintained went to owner-occupants.Similarly, when analyzed through the lens of theneighbor’s race, 52 percent of REO propertiesin communities of color were purchased byinvestors, while only 33 percent of the propertiesin predominantly White communities had thesame outcome.38

As a follow up to the 2012 report NFHA reviewedthe sale outcomes (where records were available)for 79 properties in the Memphis, Tennessee,area one year after the initial investigation andfound similar troubling patterns. Seventy percentof REO properties that were poorly maintained(or had 10 or more maintenance and marketingdeficiencies) were sold to investors, while only

46 percent of well-maintained homes went toinvestors. Only 20 percent of poorly-maintainedhomes were sold to owner occupants, while51 percent of well-maintained houses went toowner occupants.

38 National Fair Housing Alliance, “The Banks Are Back –Our Neighborhoods Are Not,” April 12, 2014, http://www.nationalfairhousing.org/Portals/33/Banks%20are%20Back%20Final%2012.3.2012.pdf.



37

When observing the same Memphis dataset through the lens of the race of the neighborhood,the outcomes are even more troubling. Of the REOs in communities of color, 70 percentwent to investors while only 18 percent in predominantly White communities were sold toinvestors. Only 24 percent of the REOs in communities of color went to owner-occupants,while 78 percent of REOs in predominantly White communities were purchased directly byowner-occupants.

Disposition Outcomes for REOs in

Communities of Color

Investor

70%

Ow ner Occupant

24%

REO

6%

Disposition Outcomes for REOs in Predominantly

White Communities

Investor

18%

Owner

Occupant

REO

4%

Dispos ition Outcomes for Well - Maintained REOs

(Few er than 10 deficiencies)

Investor

46%

REO3%

Owner

Occupant

20%

Dispos ition Outcomes for Poorly-Maintained REOs

(10 or more deficiencies)

Investor

70%

REO

10%

Owner

Occupant

20%



38

Charleston, SC

New Orleans, LA

Atlanta, GA

Memphis, TN

Memphis, TNRichmond, VA

ROM REO TO INVESTORhe six properties below were at one time bank-owned foreclosures but have since been purchased by investors.l six properteis were in investors’ hands at the time of the investigator’s visit.



39

SECTION 5:RECOMMENDATIONS

Since these findings continue to show atroubling pattern and practice of poormaintenance and marketing of REOs

located in communities of color, it is moreimportant than ever that banks, Fannie Mae,FHA, investors, federal regulators, localgovernments, community groups and fairhousing agencies continue to work to addressthis problem and ensure a fair recovery for allneighborhoods affected by foreclosures. Ofcourse, banks and other owners of REOs musthave a comprehensive understanding of theCivil Rights Act of 1866 and the Fair Housing

Act. Banks must also understand the dualpurpose of the Fair Housing Act: eliminatingdiscrimination and promoting residentialintegration in order to fulfill the intent andpurpose of the law.39 The fair housing lensshould be cast upon all policies and practicesrelated to REOs to ensure that properties inneighborhoods of color are maintained andmarketed in the same quality fashion as thosein White neighborhoods.

Coordination among the leading lendersand servicers in the industry may be requiredbecause of the significant extent to whichinstitutions engage in interrelated businessdealings, such that one bank may operateas the owner of REOs in one context and theservicer of REOs in another. As a result ofthe varying roles that banks play in the REOindustry, lenders, trustees, and preservationmanagement companies often work foreach other and with each other in different

communities and in different capacities.

39 See Trafficante v. Metro. Life Ins. Co., 409 U.S. 205,211 (1972) (quoting Senator Mondale that “the reach of theproposed law was to replace the ghettos with ‘truly integratedand balancing living patterns’” (citing 1 14 CONG. REC.2706)); see also Huntington Branch, NAACP v. Town ofHuntington, 844 F.2d 926, 933 (2d Cir. 1988) (stating thatTitle VIII should be broadly interpreted in order to fulfill the“congressional mandate” of promoting integration).

There are a number of actions that can betaken by all parties involved in the managementand disposition of foreclosures to mitigatediscriminatory practices and harmful outcomesfor African American and Latino communities.

Duty to Neighborhoods and FiduciaryDuty to Trusts Holding Mortgage inDefault

Banks and other owners of foreclosures mustnot allow the homes to sell at auction for pricessignificantly below the market value of homesin the neighborhood where it is located. Theymust bid competitively on their property and,when the bid is not sufficient, allow the home

to transition to the REO channel. This givesowner-occupants and local non-profits theopportunity to purchase the property, andit places professional real estate agents incharge of listing and selling the home.

Bulk sales should be eliminated except invery special circumstances where a non-profitor city agency needs the homes/propertyfor specific developments. Bulk sales to

investors remove the opportunity for owner-occupants to compete and result in formerlyhomeownership neighborhoods becominginvestor communities.

Careful Selection and Management ofREO Vendors

The process of REO disposition has many keyplayers and many stages in which housing

discrimination can occur. It is the responsibilityof banks and other owners to make sure thatall parties involved in the foreclosure and REOprocess are trained in the Fair Housing Act andthat strict adherence to the law is enforced. Allvendors selected to work on the disposition ofREOs should receive high-quality fair housingtraining, should not be the subject of pending



40

complaints of discrimination, and should havesuccessfully resolved any past complaints ofdiscrimination.

Each entity that owns an REO is liablefor the actions of its contractors and their

subcontractors. Banks and other owners havean obligation to implement sound quality-control practices to guarantee that REOs aremaintained and marketed without regardto the racial or ethnic composition of theneighborhoods in which REOs are located.

Since foreclosure volumes began increasingdrastically in 2006, large preservationmanagement companies have entered the

real estate industry in a completely newway. These companies have always had theduty to ensure that they are well-versed intheir responsibilities and liability under theFair Housing Act. These large regional andnationwide companies, who often contractwith subcontractors at a local level, shouldimplement robust fair housing training forall their employees, including the CEOsand subcontractors responsible for weeklymaintenance.

Implement Marketing andDisposition Practices that BetterServe Communities

Brokers are an essential part of the dispositionof REO properties. An REO listing broker’slocal expertise is vital to the proper treatmentof REOs, and banks and other owners mustenact policies to ensure that the brokerassigned to an REO property:

(a) Has an office that is located in closeproximity to the home;

(b) Has the capacity to closely manage andoversee the treatment of the REO;

(c) Has a working relationship with localgovernment and non-profits serving theneighborhoods where the REOs are located;

(d) Has a reputation for and successfulexperience in working in diverse

neighborhoods; and

(e) Does not have discrimination actionspending or any past complaints that were notsatisfactorily resolved.

These types of selection criteria will ensurethat REO brokers are familiar with thecommunity and are committed to its recovery.Banks and other owners should also maintain

and routinely train a network of diverse multi-lingual agents who can work to provide equalaccess for non-English speaking buyers andpromote residential integration.

Banks and other owners should implementbetter incentives for their brokers to sell toowner- occupants rather than investors andshould severely restrict bulk sales in theirdisposition practices. The vision for rebuildingcommunities affected by the foreclosure crisis

rests at the local level, with agencies andinstitutions whose mission it is to create healthyand vibrant neighborhoods of opportunity.Investors who pursue bulk purchases of REOsmay not share or be guided by that vision.By making sure that some of these foreclosedhomes are put in the hands of non-profitcommunity development organizations,community land trusts, and other community-based and community-minded institutions,banks and other owners can facilitate therealization of that vision. Of course, fairhousing principles and requirements shouldbe followed at every step.

One way to address this issue is to giveprospective owner-occupants and non-profit community organizations greater



41

opportunities to purchase foreclosed homes.Some policies offer only a 15-day periodfor such buyers before opening sales up toinvestors. NFHA recommends that thesehomes be available exclusively to owner-occupants and non-profit organizations for

at least 30 days before they are availableto the entire market. Wells Fargo has takenthe lead in implementing sales practices thatpromote homeownership by implementingan additional period where owner-occupantsand non-profits have priority every time theprice of the REO is reduced. All banks andother owners should implement this practice.

Additionally, banks must not give preferenceto cash offers over owner-occupant offers that

require financing.

Communities that have been hard hit byforeclosures are struggling to devise ways tohelp neighborhoods recover from the damagethey have suffered. Many have developedrevitalization plans, using federal funds underthe Neighborhood Stabilization, CommunityDevelopment Block Grant, HOME and otherprograms, as well as other sources. Thedisposition of REO properties, both at the

point of sale to investors and the point atwhich investors resell these homes, should becoordinated with these local plans to leveragea positive impact.

Implement Better Quality ControlMeasures

Banks and other owners must implementbetter quality control measures across theboard. There must be swift and severepenalties for vendors who fail to do their workin a professional manner. Special attentionmust be directed to neighborhoods that havebeen determined to be most vulnerable topoor work by vendors. This should includeneighborhoods that are predominantly

African-American, Latino or Asian American,

as well as neighborhoods that are low ormoderate income.

A system of quality control does not functionproperly if the information collected by thequality control teams is not properly utilized.

A recent report from the OIG for the GSEs thatreviewed the work of property preservationcompanies working in the pre-foreclosurespace, many of whom also work in the post-foreclosure REO market, showed that vendorshad manipulated photos to alter timestamps,that the same pictures were used month aftermonth to show the condition of the property,and that even when quality control was inplace, the validation of inspection reports had

not been conducted properly.

40

This sort ofpoor accountability is entirely unacceptable. Vendors who fail to adhere to good qualitymaintenance standards and who aresuspected of such manipulation should besuspended or terminated by banks and otherowners for their poor work. Freddie Mac hasa system in place to monitor and terminatevendors as appropriate.

Make REO Ownership Information

Transparent, Accurate, and Accessible

Every bank or REO owner should maintaina public database containing all of its REOlistings, including the name and contactinformation of the preservation managementcompany, broker, and any other vendorsresponsible for the maintenance or sale ofthe property. Neighbors and local advocatesmust have access to clear ownership recordsthat are updated in an accurate and timelymanner. Banks and other owners shouldensure vendors are posting accurate signagewith valid contact information and shouldalso provide detailed information about the

40 Federal Housing Finance Agency Office of InspectorGeneral, “FHFA Oversight of Enterprise Controls Over Pre-Foreclosure Property Inspections,” March 25, 2014, http://fhfaoig.gov/Content/Files/AUD-2014-012.pdf.



42

REOs for which they provide services on theirwebsites.

Local governments should continue toimplement Vacant Property Registries (VPR)that require banks, other owners, and

servicers to register their vacant propertiesand provide up-to-date contact informationfor parties responsible for any maintenance orother issues that may arise on their properties.These VPRs must be monitored and violationsaddressed on a routine basis to mitigate theharmful effects of poorly maintained vacancieson neighborhoods. Cities like Oakland andRiverside in California have had success inenforcing VPRs and have collected millions

of dollars in violation fines from the banks.Others, however, like the City of Los Angeles,are still struggling to obtain cooperationfrom banks. They have blighted bank-ownedforeclosures littered throughout the city,with thousands of dollars in violation finesuncollected.41 NFHA has observed that somemanagement companies brag that they areable to negotiate down the fines that banks andmanagement companies owe because of theirviolations of local ordinances. This behavior

is unacceptable and local governments mustremain vigilant in holding banks accountablefor their neglect.

Better Oversight from FederalRegulators and Congress

Many of the institutions that have beenengaging in discriminatory practices in theREO market are federally regulated. Federalregulators, including the Consumer FinancialProtection Bureau, Federal Housing Finance

Agency, and the Federal Reserve, must

41 Baldonado, Kim, and Kelly Goff, “Residents DemandBanks Pay to Clean Up Blighted Properties,” NBC4 Los Angeles, May 8, 2014, http:// http://www.nbclosangeles.com/news/local/Residents-Demand-City-Enforce-Anti-Blight-Ordinance-258560001.html.

continue to be vigilant and conduct industryreviews to ensure proper conduct and toensure that banks and the GSEs are notimplementing practices that have a disparateimpact on homeowners from protected classesor neighborhoods of color.

Audits, such as the one reported in March2014 by the Federal Finance Housing Agency’sOffice of Inspector General that uncoverednumerous examples of poor quality work andineffective quality control measures, shouldbe conducted in the post-foreclosure, or REOspace. In addition to the issues specificallyaddressed in this report, a larger investigationshould examine whether and to what extent

vendor contracts are made available tominority and women-owned enterprises.Congress must hold hearings to investigatediscrimination in the REO arena so thatneighborhoods of color and the businessesthat support these neighborhoods are not leftbehind in the housing and economic recovery.While Congress has held extensive hearingson the housing crisis, this particular issueand its implications on the national debt andour nation’s economic health have not been

sufficiently addressed.

Create a Path Back to Homeownership

Over 4 million families have lost their homesto foreclosure in the last five years. Evidencefrom a variety of federal enforcement actionstells us that in many cases, families weresteered into loans more risky and moreexpensive than their financial qualificationsshould have dictated. 42 In other cases, peoplehave been caught between record-high levels

42 One example is the recent settlement between the UDDepartment of Justice and Countrywide Financial, in whichthe government found that some 10,000 African Americanand Latino borrowers who qualified for prime loans weresteered into subprime loans. For more details, see the DOJpress release, available at http://www.justice.gov/opa/pr/2011/December/11-ag-1694.html.



43

of sustained unemployment and falling homeprices that have made it impossible for them tosell or refinance their homes. Offering thesefamilies a path back to homeownership is animportant component of rebuilding stable,vibrant communities.

When an REO is acquired at a price belowthe previous mortgage balance, the newowner can set a new sales price that is basedon the property’s market value, eliminatingthe burden of excess debt that was fueled byunsustainable mortgage products. Many REOproperties are expected to be put back intouse as rentals. Some of these may remainrental properties for the foreseeable future,

while others are likely to be resold within afew years. The first group may help addressthe country’s growing need for rental unitswith more than 2 bedrooms. The secondgroup may offer a path to homeownership forfamilies who have been through foreclosure

and others who have difficulty qualifying fora mortgage in the current mortgage market.

Non-profit, community-based developmentorganizations and community developmentfinancial institutions are exploring the use

of lease-purchase programs for these REOproperties. Under such programs, a portionof each month’s rent is set aside to build adown payment, and the rental period givesthe tenant (who may be the previous owner)time to repair his/her credit, with the goal ofultimately purchasing the home. With theproper protections built in for the tenant/potential purchaser, this may be a promisingpath to rebuilding financial security for

families knocked low by foreclosure. NFHArecommends that banks and other investorswho hold REO portfolios work with appropriatenon-profit and/or local government agenciesto make some REO properties availablethrough such lease-purchase programs.



44

NFHA and its partners have filed numerousHUD administrative complaints againstlenders and preservation managementcompanies that have failed to maintain their

REO inventory in communities of color. It isour hope that these corporations correct theiractions through the recommendations listedabove and also provide much needed reliefto the communities that have fallen victimto their poor and discriminatory practices.

Wells Fargo, the first bank against which NFHAand its partners filed a complaint, led the wayto improving its REO practices by enteringinto a HUD conciliation agreement in June

2013. This agreement provides funds forcommunity relief and improvements to currentpolicies and practices that will have a positiveimpact on recovery in communities of color.

As part of the conciliation agreement,Wells Fargo agreed to implement bestpractices for maintenance and marketing

of its REO properties and the quality of itsproperty management will be monitoredby a third party. Wells Fargo extended itsFirst-Look Homebuyer program to prioritize

homeowner- over investor-purchasers of itsREO properties, facilitated easy access toinformation about its REO properties, andimproved its web site and toll free numbersto provide more information to prospectivepurchasers and those who want to report aproblem with a Wells’ REO property or agent.

The agreement also provided $27 million inrelief to communities of color in 19 cities tobe administered by NFHA and its partnering

fair housing organizations. The fair housinggroups will provide grants to local groups toprovide much needed relief to communities ofcolor that have suffered from high foreclosurerates. In many programs, the funds will alsobe matched by local banks, retail chains suchas Home Depot, and other local organizationsto maximize the benefit to neighborhoods.

SECTION 6: COMMUNITY RELIEF INITIATIVES



45

The following section outlines some of theways this funding will assist communities:

1) Providing Down Payment andClosing Cost Assistance

2) Rehabilitating Vacant or Rental

Housing Stock

3) Beautifying Neighborhoods andQuality of Life Improvements

4) Empowering Communities withGood Data on Foreclosures

5) Creating Accessible Housing andNeighborhoods

6) Increasing Affordable Housing

Opportunities

These initiatives are described in more detailin the sections below.

Providing down payment andclosing cost assistance

In many of the 19 cities, down payment andclosing cost assistance were identified askey ways to promote homeownership and

encourage stability in communities of colorthat were hit hard with vacant and abandonedproperties after the foreclosure crisis. Manyof these programs are supplemented withfirst-time homebuyer education programsand other housing counseling services.In Baltimore, for example, NFHA hasdonated $100,000 to St. Ambrose Housing

Aid Center for a program that provideshomebuyers with small grants to meet their

closing cost needs. One homeowner, HelenKing, was able to purchase her first homein the Hamilton Neighborhood in Baltimorethrough the assistance of St. Ambroseand its closing cost assistance program.

Figure 8 - Helen King’s new home inBaltimore, MD, purchased with the help of St.

Ambrose’s closing cost assistance program.

In Oakland, CA, NFHA is partnering with

the ROOT project. ROOT is providing downpayment assistance as well as gap fundingto help homeowners refinance their homesinto lower interest rate loans. In Miami, FLthe HOPE Fair Housing Center partneredwith the Housing Foundation of Americato provide down payment assistance toformerly homeless program participants.

Similarly, the Toledo (OH) Fair HousingCenter will provide $360,000 in emergency

mortgage assistance grants to homeowners,and the South Suburban Housing Centerin Homewood, IL, is providing grantsof $2,000 – $15,000 to homeownerswho can use the funds to either remedytheir mortgage delinquency or to investas owner-occupants in previouslydistressed or abandoned properties.



46

Rehabilitating vacant or rentalhousing stock

Funds for community relief have also beeninvested in communities to rehabilitate

housing stock that has been vacant or used forrental properties and deteriorated over time.For example, HOPE Fair Housing Center inWest Chicago, IL, recently awarded a grantfrom its community relief funds to Oak ParkRegional Housing Center (OPRHC). Thisgrant allows the center to provide up to$4,000 per unit to landlords to focus onsmall improvements of 2-4 unit buildingswhere one or more of the units are vacant.This will allow for small improvements such

as painting and installing new appliances.

In Milwaukee, WI, the MetropolitanMilwaukee Fair Housing Council provideda grant of $175,000 to a partnershipcomprised of the ACTS CommunityDevelopment Corporation, Housing

Resources Inc., Washington Park Partners,and Harambee Great NeighborhoodInitiatives. Each organization will contributeservices to the project, including assistanceto 50 families in purchasing vacant,

foreclosed homes for owner occupancy;pre-purchase and post-purchase homebuyereducation; and grants for repairs tohomes that were previously foreclosures.

In Baltimore, MD, St. Ambrose has alsoundertaken the rehabilitation of several REOsfor homeowners, one of which can be seenin the photographs below. This propertyunderwent a great deal of renovation,including the installation of a new kitchen

and bathroom. Such changes have allowedthis REO property to be transferred directlyto a homeowner rather than be flipped orabandoned by one of the many investorsworking in Baltimore’s communities of color.

“I am so grateful and blessed to have been chosen fothis program. After being rejected from other program

and not knowing what to do or where to turn, the ToledFair Housing Center introduced me to the [MLK InclusivCommunities] Plan. It was their guidance and knowledgthat not only allowed me to remain in my home but alshave my home paid off.”

CHERYL RILEY, HOMEOWNER WHO ACCESSED FUNDS FROM CONCILIATION

WITH WELLS FARGO TO STAY IN HER HOME

Rehabilitating vacant or rentalhousing stock

Funds for community relief have also beeninvested in communities to rehabilitate

housing stock that has been vacant or used forrental properties and deteriorated over time.For example, HOPE Fair Housing Center inWest Chicago, IL, recently awarded a grantfrom its community relief funds to Oak ParkRegional Housing Center (OPRHC). Thisgrant allows the center to provide up to$4,000 per unit to landlords to focus onsmall improvements of 2-4 unit buildingswhere one or more of the units are vacant.This will allow for small improvements such

as painting and installing new appliances.

In Milwaukee, WI, the MetropolitanMilwaukee Fair Housing Council provideda grant of $175,000 to a partnershipcomprised of the ACTS CommunityDevelopment Corporation, Housing

Resources Inc., Washington Park Partners,and Harambee Great NeighborhoodInitiatives. Each organization will contributeservices to the project, including assistanceto 50 families in purchasing vacant,

foreclosed homes for owner occupancy;pre-purchase and post-purchase homebuyereducation; and grants for repairs tohomes that were previously foreclosures.

In Baltimore, MD, St. Ambrose has alsoundertaken the rehabilitation of several REOsfor homeowners, one of which can be seenin the photographs on the following pages.This property underwent a great deal ofrenovation, including the installation of a new

kitchen and bathroom. Such changes haveallowed this REO property to be transferreddirectly to a homeowner rather than be flippedor abandoned by one of the many investorsworking in Baltimore’s communities of color.

“I am so grateful and blessed to have been chosen fothis program. After being rejected from other program

and not knowing what to do or where to turn, the ToledFair Housing Center introduced me to the [MLK InclusivCommunities] Plan. It was their guidance and knowledgthat not only allowed me to remain in my home but alshave my home paid off.”

CHERYL RILEY, HOMEOWNER WHO ACCESSED FUNDS FROM CONCILIATION

WITH WELLS FARGO TO STAY IN HER HOME

46



47

Beautifying neighborhoods andquality of life improvements

Part of the vision for community relief iscentered on creating neighborhoods that are

desirable to live in and where residents canfeel a pride in their home and community.Projects that create this sense of communityand neighborhood stabilization can varyand leave room for a lot of creativity andtailoring at the local level. In Dayton, OH,for example, the Miami Valley Fair HousingCenter will be administering a programtargeted to neighborhood associations,social or fraternal organizations, or otherunincorporated groups that may not have

a formal structure or tax exempt status,and will provide grants of up to $5,000to assist with neighborhood projects. Forexample, this could include public artsprojects such as murals promoting diversity,civil rights, or fair housing. It could alsobe other neighborhood beautification

projects, modifying a vacant lot into anurban garden, or repairing recreational trailsused by the resident of a neighborhood.

Similarly in Indianapolis, IN, a portion

of the funds will go to neighborhoodstabilization and increasing the quality oflife in neighborhoods of color. Already, theFair Housing Center of Central Indiana hasgiven a grant to Marian University to create aFarmer’s Market which will be the only one inthe area, an Urban Teaching Garden, and aSummer Biking Camp targeting at-risk youth.It has also given a grant to Keep IndianapolisBeautiful to modify a current vacant lot intoa pocket park in the Historic Meridian Park

neighborhood. The Harrison Center for the Arts has received a grant to create a publicarts project that will focus on the value ofcommunity in a low-income neighborhoodof color. The art will be interactive andhave audio, and all programs will beaccessible to persons with disabilities. .

Cheryl Riley with Michael Marsh, CEO of the Toledo Fair Housing Center, aother staff in front of her home in an African-American Neighborhood in To

2

EFORE chen of REO in Baltimore before renovation usingnds from Wells Fargo conciliation agreement.

AFTERKitchen of REO in Baltimore after renovation usingfunds from Wells Fargo conciliation agreement.

Beautifying neighborhoods andquality of life improvements

Part of the vision for community relief is

centered on creating neighborhoods that aredesirable to live in and where residents canfeel a pride in their home and community.Projects that create this sense of communityand neighborhood stabilization can varyand leave room for a lot of creativity andtailoring at the local level. In Dayton, OH,for example, the Miami Valley Fair HousingCenter will be administering a programtargeted to neighborhood associations,

social or fraternal organizations, or otherunincorporated groups that may not havea formal structure or tax exempt status,and will provide grants of up to $5,000to assist with neighborhood projects. Forexample, this could include public artsprojects such as murals promoting diversity,civil rights, or fair housing. It could alsobe other neighborhood beautification

projects, modifying a vacant lot into anurban garden, or repairing recreational trailsused by the resident of a neighborhood.

Similarly in Indianapolis, IN, a portionof the funds will go to neighborhoodstabilization and increasing the quality oflife in neighborhoods of color. Already, theFair Housing Center of Central Indiana hasgiven a grant to Marian University to create aFarmer’s Market which will be the only one inthe area, an Urban Teaching Garden, and aSummer Biking Camp targeting at-risk youth.It has also given a grant to Keep Indianapolis

Beautiful to modify a current vacant lot intoa pocket park in the Historic Meridian Parkneighborhood. The Harrison Center for the

Arts has received a grant to create a publicarts project that will focus on the value ofcommunity in a low-income neighborhoodof color. The art will be interactive andhave audio, and all programs will beaccessible to persons with disabilities. .

47



48

FORE chen of REO in Baltimore before renovation usingds from Wells Fargo conciliation agreement.

AFTERKitchen of REO in Baltimore after renovation usingfunds from Wells Fargo conciliation agreement.

Empowering communities with gooddata on vacancies and foreclosures

In many cities and counties across the country,the lack of transparent and accurate dataon vacancies and foreclosures is a glaringissue for neighbors, government officials,and emergency responders. In the Westernsuburbs of Chicago, outreach meetings withlocal stakeholders revealed that communitygroups felt a need for good quality data onvacancies and foreclosures. Communityrelief funds may be spent on supporting

neighborhood groups to form databases onvacant and abandoned properties in theirservice areas to force better maintenance andmarketing of those properties, as well as fortitle acquisition for rehab of those propertiesby local non-profits or small investors.

Creating accessible neighborhoods

Fair housing groups work tirelessly to ensure

that persons with disabilities have accessto housing of all kinds. Many of the fairhousing centers are using community relieffunds to create accessible housing as wellas to uplift communities that were hit bythe foreclosure crisis. For example, theDayton program will include an accessibilitymodification component, in partnershipwith Rebuilding Together Dayton, PeopleWorking Cooperatively, and Habitat for

Humanity, to assist disabled homeownersor elderly homeowners who wish to agein place and who are at or under 100percent of area median income to allowthem to more fully use and enjoy theirresidence. Such modifications may includethe installation of aluminum modular rampsfor people who use wheelchairs, bathroom

Empowering communities with gooddata on vacancies and foreclosures

In many cities and counties across the country,the lack of transparent and accurate dataon vacancies and foreclosures is a glaringissue for neighbors, government officials,and emergency responders. In the Westernsuburbs of Chicago, outreach meetings withlocal stakeholders revealed that communitygroups felt a need for good quality data onvacancies and foreclosures. Communityrelief funds may be spent on supportingneighborhood groups to form databases on

vacant and abandoned properties in theirservice areas to force better maintenance andmarketing of those properties, as well as fortitle acquisition for rehab of those propertiesby local non-profits or small investors.

Creating accessible neighborhoods

Fair housing groups work tirelessly to ensure

that persons with disabilities have accessto housing of all kinds. Many of the fairhousing centers are using community relieffunds to create accessible housing as wellas to uplift communities that were hit bythe foreclosure crisis. For example, theDayton program will include an accessibilitymodification component, in partnershipwith Rebuilding Together Dayton, PeopleWorking Cooperatively, and Habitat forHumanity, to assist disabled homeowners

or elderly homeowners who wish to agein place and who are at or under 100percent of area median income to allowthem to more fully use and enjoy theirresidence. Such modifications may includethe installation of aluminum modular rampsfor people who use wheelchairs, bathroommodifications, and the installation of grabbars.

AFTERBathroom of REO in Baltimore before renovation usingfunds from Wells Fargo conciliation agreement.

EFOREathroom of REO in Baltimore before renovation usingnds from Wells Fargo conciliation agreement

48



49

AFTERBathroom of REO in Baltimore before renovation usingfunds from Wells Fargo conciliation agreement.

FOREthroom of REO in Baltimore before renovation usingds from Wells Fargo conciliation agreement

modifications, and the installation of grabbars.

The Fair Housing Continuum has joined aspecial project called “Heroes Commons” inthe Parramore District of Orlando, Florida.This program, joined through HANDS ofCentral Florida and spearheaded by theOrlando Regional Realtor Association,will build an urban village of at least sixsingle family homes for veterans and activeduty military with disabilities as close tomortgage-free as possible. Because thehome owners will be disabled and the homeswill be in a distressed neighborhood, theContinuum will match up to $30,000 each.The City of Orlando will donate the vacantlots and the local Architects Associationwill provide the plans and drawings freeof charge. The local Builders Associationwill provide the labor at cost plus 10

percent. Home Depot has agreed to matchthe Continuum with money and supplies.

In Indianapolis, the Fair Housing Center ofCentral Indiana (FHCCI) provided the fundsfor the renovation of the home of a youngman who is a quadriplegic and his elderlygrandparents. After being scammed by a localcontractor who poured the addition’s cementslab and then disappeared with the family’smoney, the family came in contact with theFHCCI. Once FHCCI was able to verify thatthe family’s income was less than 80 percentof the area median household income, theirconstruction manager and disability expertmet with the family and came up with the bestplan to make the home accessible for him.The contractor working on the home was sostruck by the family’s struggle that he poureda concrete wheelchair ramp free of chargeto remove the step barrier into the home.

4

The Fair Housing Continuum has joined aspecial project called “Heroes Commons” inthe Parramore District of Orlando, Florida.This program, joined through HANDS ofCentral Florida and spearheaded by theOrlando Regional Realtor Association,will build an urban village of at least six

single family homes for veterans and activeduty military with disabilities as close tomortgage-free as possible. Because thehome owners will be disabled and the homeswill be in a distressed neighborhood, theContinuum will match up to $30,000 each.The City of Orlando will donate the vacantlots and the local Architects Associationwill provide the plans and drawings freeof charge. The local Builders Associationwill provide the labor at cost plus 10percent. Home Depot has agreed to matchthe Continuum with money and supplies.

In Indianapolis, the Fair Housing Center ofCentral Indiana (FHCCI) provided the fundsfor the renovation of the home of a youngman who is a quadriplegic and his elderlygrandparents. After being scammed by a local

contractor who poured the addition’s cementslab and then disappeared with the family’smoney, the family came in contact with theFHCCI. Once FHCCI was able to verify thatthe family’s income was less than 80 percentof the area median household income, theirconstruction manager and disability expert

met with the family and came up with the bestplan to make the home accessible for him.The contractor working on the home was sostruck by the family’s struggle that he poureda concrete wheelchair ramp free of chargeto remove the step barrier into the home.

49

Cheryl Riley with Michael Marsh, CEO of the Toledo Fair Housing Center, aother staff in front of her home in an African-American Neighborhood in To



50FORE: Two side by side REO properties with broken windows, poor curb appeald fire damage in an African-American neighborhood in Indianapolis

Increasing Affordable HousingOpportunities

Some of the local groups are also using theircommunity relief funds to promote affordablehousing in their local areas. In Baton Rouge,

LA, for example, the Greater New OrleansFair Housing Action Center is providingfunds to the Louisiana Affordable HousingLand Trust to provide grants or low interestloans to housing developers, in return for acommitment from the developer to ensureperpetual affordability of the subject properties.Developers will use deed and title restrictionsand other tools to ensure that propertiesare owner-occupied or rented exclusivelyby low- and moderate-income residents.

SECTION 7: CONCLUSIONS

As our nation continues to recover from adevastating housing crisis, families of colorare in danger of being left behind becauseof discriminatory practices in the housing andbanking industries. The poor maintenance and

marketing of REO properties in communitiesof color by large banks is a key factor that willinhibit the stabilization of these neighborhoods.

As this report outlines, NFHA and its partnershave continued to find that properties in

communities of color are not maintained in anequal manner to those in predominantly Whitecommunities. REO properties in communitiesof color continue to be more likely to havetrash, overgrown grass and shrubbery, andto have boarded and broken windows. Theyare not being marketed with professional“For Sale” signs and instead are marketedas distressed or dangerous with more “NoTrespassing” and “Foreclosure” or “Auction”signage. Properties in communities of color

are neglected and deteriorating, which drivesdown the sale price of the properties if theyare in fact ever sold, and ushers in investorpurchasers rather than homeowners, thusfurther destabilizing the neighborhood.

This behavior must be stopped and reversedthrough drastic changes in the practices of thebanking industry, many of which are outlined

FORE: Two side by side REO properties with broken windows, poor curb appeald fire damage in an African-American neighborhood in Indianapolis

Increasing Affordable HousingOpportunities

Some of the local groups are also using theircommunity relief funds to promote affordablehousing in their local areas. In Baton Rouge,

LA, for example, the Greater New OrleansFair Housing Action Center is providingfunds to the Louisiana Affordable HousingLand Trust to provide grants or low interestloans to housing developers, in return for acommitment from the developer to ensureperpetual affordability of the subject properties.Developers will use deed and title restrictionsand other tools to ensure that propertiesare owner-occupied or rented exclusivelyby low- and moderate-income residents.

SECTION 7: CONCLUSIONS

As our nation continues to recover from adevastating housing crisis, families of colorare in danger of being left behind becauseof discriminatory practices in the housing andbanking industries. The poor maintenance and

marketing of REO properties in communitiesof color by large banks is a key factor that willinhibit the stabilization of these neighborhoods.

As this report outlines, NFHA and its partnershave continued to find that properties in

communities of color are not maintained in anequal manner to those in predominantly Whitecommunities. REO properties in communitiesof color continue to be more likely to havetrash, overgrown grass and shrubbery, andto have boarded and broken windows. Theyare not being marketed with professional“For Sale” signs and instead are marketedas distressed or dangerous with more “NoTrespassing” and “Foreclosure” or “Auction”signage. Properties in communities of color

are neglected and deteriorating, which drivesdown the sale price of the properties if theyare in fact ever sold, and ushers in investorpurchasers rather than homeowners, thusfurther destabilizing the neighborhood.

This behavior must be stopped and reversedthrough drastic changes in the practices of thebanking industry, many of which are outlined



51FTER: The REOs were renovated and put back in to the hands of owner occupants using grants from theair Housing Center of Central Indiana and Wells Fargo community relief funds from conciliation agreement.

in this report. Banks and their vendorsmust have a deep understanding of the FairHousing Act and their liability under the lawduring the management of REO properties.

A local, diverse vendor pool should beutilized for the maintenance and marketing

of REO properties. Vendors must also bemanaged with clear expectations and betterquality control, and neighborhoods of colormust be reviewed with more detail to flagdiscriminatory behavior. Federal regulators,local governments, and local communitygroups must remain ever-vigilant to holdbanks and the GSEs accountable for theiractions with regards to REO management.

Banks must take steps now to reform their

REO disposition practices, work with fairhousing and community groups, and complywith the Fair Housing Act. If these changesare made, our communities across the countryhave a better chance at recovering in a waythat leads to vibrant, stable, and integratedcommunities. If banks and other ownersfail to respond immediately and affirmativelyaddress these discrimination issues, they face

the consequences of protracted administrativeand legal proceedings which will demandremuneration for neighborhoods harmed bytheir practices.

6FTER: The REOs were renovated and put back in to the hands of owner occupants using grants from theair Housing Center of Central Indiana and Wells Fargo community relief funds from conciliation agreement.

in this report. Banks and their vendorsmust have a deep understanding of the FairHousing Act and their liability under the lawduring the management of REO properties.

A local, diverse vendor pool should beutilized for the maintenance and marketing

of REO properties. Vendors must also bemanaged with clear expectations and betterquality control, and neighborhoods of colormust be reviewed with more detail to flagdiscriminatory behavior. Federal regulators,local governments, and local communitygroups must remain ever-vigilant to holdbanks and the GSEs accountable for theiractions with regards to REO management.

Banks must take steps now to reform their

REO disposition practices, work with fairhousing and community groups, and complywith the Fair Housing Act. If these changesare made, our communities across the countryhave a better chance at recovering in a waythat leads to vibrant, stable, and integratedcommunities. If banks and other ownersfail to respond immediately and affirmativelyaddress these discrimination issues, they face

the consequences of protracted administrativeand legal proceedings which will demandremuneration for neighborhoods harmed bytheir practices.



52

Charleston, SC

New Orleans, LA

Atlanta, GA

Memphis, TN

Richmond, VA

APPENDIX: LOCAL FINDINGS

Atlanta, GA

!(!(!(

!(

!(!(!(

!(!(

!(

!(

!(!(

!(

!(

!(

!(

!(

!(!(

!(

!(

!(

!(!(!(!(

!(

!(

!(

!(

!(!(

!(

!(

!(

!(

!(!(!(!(

!(!(

!(

!(

!(

!(

!(

!(!(!(!(

!(

!(!(!( !(!(!(!(!(!(

!( Decatur

Marietta

Dunwoody

East Point

College Park

Sandy Springs

Panthersville

North Decatur

North Atlanta

Atlanta

Maintenance or Marketing Deficiencies

!( 0-4 deficiencies

!( 5-9 deficiencies

!( 10 or more deficiencies

% Non-White

0% - 49%

50% - 100%



53

Baltimore, MD

!(!(!(!(

!(!(

!(

!(!(

!(!(

!(

!(

!(

!(

!(

!(

!(

!(

!(!(

!(

!(!(

!(!(

!( !(

!(

!(

!(!(

!( !(

!(!(

!(

!(

!(

Towson

Arbutus

Parkville

Baltimore

Pikesville

Brooklyn Park

Lansdowne-Baltimore Highlands

!(

!(

!(Ellicott City

!(

!(

Parole

Annapolis


!( 0-4 deficiencies

!( 5-9 deficiencies


% Non-White

0% - 49%

50% - 100%



54

Baton Rouge, LA

New Orleans, LA Memphis, TN

Richmond, VA

!(

!(

!(

!(!( !(

!(!(!(

!(!(

!(

!(

!(

!(

!(!(!(

!(

!(

!(

!(!(

!(

!( !(!(

!(!(

!(

!(!(!(

!(!(

!(!(

!(!(!(

!(

!(

!(

!(

!(!(

!(

!(!(

!(

!(!(

!(

!(

!(

!(!(

!(!(

!(

!(!(

!(

!(

!(

!(

!(

!(

!(

!(

!(

!(

!( !(

!(!(

!(

!(

!(

!(

!(!(!(

!(

Arlington

Baton Rouge

Prairieville

Denham Springs


!( 0-4 deficiencies

!( 5-9 deficiencies


% Non-White

0% - 49%

50% - 100%



55

Charleston, SC

!(!(!(

!( !(

!(

!(

!(

!(!(

!(

!(

!(

!(

!(

!(

!(

!( !(

!(

!(

!(

!(

!(Hanahan

Charleston

Johns Island

North Charleston


!( 0-4 deficiencies

!( 5-9 deficiencies


% Non-White

1% - 49%

50% - 100%



56

Chicago, IL

Memphis, TN

!(!(

!(

!(!(!(

!(

!(

!(!(

!(

!(!(

!(!(

!(

!(

!(!(!(

!(!(

!(!(!(!(!(

!(

!(

!(

!(

!(

!(!(

!(

!(

!(!(

!(

!(!(!(

!(

!(

!(!(!(!(

!(!(

!(!(

!(

!(!(!(

!(!(!(

!(

!(

!(!(!(!(

!(!(!(

!(

!(!(!(

!(

!(

!( !(!(!(!(

!(

!(

!(

!(!(

!(!(

!(

!(

!(!(

!(!(!(

!(!(!(

!(!(

!(

!(!(!(!(

!(

!(

!(

!(

!(!(!(

!(!( !(!(!(!(

!(

!(!(

!(

!(!(!(!(!(

!(

!(

!(

!(

!(!(!(

!(!(

!( !(

!(

!(!(

!(!(

!(!(

!(

!(

!(!(

!(

!(

!(!(!(

!(!(

!(!(

!(!(

!(

!(!(!(!(!(!(!(

!(

!(

!(

!( !(!(!(!(!(

!(

!(!(!(!(!(

!(!(

!(!(!(!(!(

!(

!(

!(

!(

!(!(!(!(!(

!(

!(

!(

!(!(!(

!(

!(

!(!(

!(

!(!(

!(!(!(!(

!(

!(!(!(

!(!(

!(

!(!(!(!(!(!(

!(

Skokie

Mokena

Markham

Chicago

Evanston

Park Ridge

Des Plaines

!(!(

!(!(!(

!(

!(

!(

!(!(!(

!(!(

!(!(!(!(

!(!(!(

!(!(!(!(

Waukegan

North Chicago

!(

!(!( !(

!(

!(

!(

!(

!(

!(

!(

!(

!(

!(

!(

!( !(

!(!(

!(

!(

!(

!(!(

!(

!(

!(

!(

!(

!(

!( !(!(!(

!(

!(

!(!(

!(

!(!(

!(!(

!(!(!(

!(!(

!(

!(!(!(

!(!(

!(!(!(

Aurora

!(!(!(!(!(

!(!(

!(

!(

!(

!(

!(!(

!(

!(

!(

!(

!(!(

!(

!(

!(

!(

!(

!( !(!(!(!(!(!( !(

!(

!(!(!(!(!(!(

!(

!(Elgin

Lombard

Hanover Park

Maintenance or marketing deficiencies

!( 0-4 deficiencies

!( 5-9 deficiencies


% Non-White

0% - 49%

50% - 100%



57

Dallas, TX

!(!(

!(

!(

!(

!(

!(

!(

!(!(

!(

!(!(

!(

!(

!(!(

!(

!(!(!(!(

!(

!(

!(

!(!(!(

!(!(

!(

!(!(!(!(

!(!(!(

!(!(

!(

!(!(

!(

!(!(!(

!(!(!(

!(Wylie

Dallas

RowlettGarland

Addison

Mesquite

Richardson

Carrollton

Farmers Branch

University Park


!( 0-4 deficiencies

!( 5 -9 deficiencies


% Non-White

0% - 49%

50% - 100%



58

Dayton, OH


Richmond, VA

!(

!(

!(

!(

!(

!(

!(!(

!(!(

!(

!(

!(!(

!(

!(!(

!(!(!(

!(

!(!(

!(!( !(

!(

!(

!(

!(

!(

!(

!(!(

!(

!(!(

!(

!(

!(!(

!(

!( !(

!(

!(

!(

!(

!(

!(

!(

!(

!(!(!(

!(

!(!(

!(

!(

!(!(!(

!(!( !(

!(

!(

!(

!(!(

!(

!(

!(!(

!(

!(!(

!(!(

!(

!(

!(!(

!(

!(!(

!(

!(!(!(!(

!(

!(!(

!(!(

Shiloh

Dayton

Vandalia

Franklin

Fairborn

Riverside

Kettering

Englewood

Springboro

Miamisburg Centerville

Beavercreek

Huber Heights

West Carrollton City


!( 0-4 deficiencies

!( 5-9 deficiencies


% Non-White

0% - 49%

50% - 100%



59

Denver, CO

!(

!(

!(

!(

!(

!(

!(

!(

!(!( !(

!(

!(

!(!(

!(

!(!(

!(

!(!(

!(

!(!(!(

!(!(

!( !(!(

!(!(

!(

!(!(!(!(!( !(

!(

!(!(!(!(!(

!(

!(

!(!(!(!(

!(

!(

!(!(

!(!(!(!(

!(

!(!(!(

!(

!(!(

!(

!(

!(

!(!(!(!( !(

!(

!(

!(

!(!(

!(!(

!(

!(

!(

!(

!(

!(

!(

!(

!(!(

!(!(!(!( !(

!(

!(!(

!(

!(

!(

!(

!(!(!(

!(!(!(!(!(!(!(

!(!(

!(!(

Denver

Aurora

Berkley

Littleton

Englewood

SouthglennCastlewood

Highlands Ranch

Greenwood Village

Marketing or Maintenance Deficiencies

!(0-4 deficiencies

!( 5-9 deficiencies


% Non-White

2% - 49%

50% - 100%



60

Gary, IN


Richmond, VA

!(

!(

!(

!(

!(!(

!(

!(

!(

!(

!(

!(

!(

!(

!(

!(

!(!(

!(

!(!(

!(

Gary

Lowell

Liberty Park


!( 0-4 deficiencies

!( 5-9 deficiencies


% Non-White

0% - 49%

50% - 100%



61

Grand Rapids, MI

!(

!(

!(

!(

!(!(!(!( !(

!(!( !(!(

!(!(

!(!(!(

!( !( !(

!(!(!(

!(!(!(

!( !(!(!(

!(

!(!( !(!(!(!(!(!(!(

!( !(!(!(

!(!(

!(!(!(

!(

!(!(

!(!(

!(

!(!(!(!(

!(!(

!(

!(

!(!(

!(

!(!(

!(!(

!(!(

!(!(

!( !(!(!(

!(!(

!(!(

!(

!(

!(!(

!(!(

!(

!(!(!(!(!(!(!(!(!(!(

!( !(!(

!(

!(

!(!(

!(!(

!(

!(!(

!(!(!(

!(Walker

Wyoming

Kentwood

Northview

Grandville

Grand Rapids

Comstock Park

East Grand Rapids


!( 0-4 deficiencies

!( 5-9 deficiencies


% Non-White

0% - 49%

50% - 100%



62

Hampton Roads, VA

Memphis, TN

!(!(!(

!(!(!(

!(

!(!(

!(

!(!( !(

!(

!(

!(Norfolk

Hampton

Poquoson

Chesapeake

Newport News !(!(

!(

Williamsburg

!(

!(

!(

!(

!(

!(

Virginia Beach


!( 0-4 deficiencies

!( 5-9 deficiencies


% Non-White

0% - 49%

50% - 100%



63

Indianapolis, IN

!(

!(

!(!(

!(

!(

!(

!(!(

!(

!( !(!(!(

!(

!(!(!(!(!(

!(!(

!(

!(!(!(

!(!(

!(!(!(

!(!(

!(!(

!(

!(!(!( !(

!(

!(

!(

!(!(

!(!(!(!(

!(

!(!( !(!(!(

!(

!(

!(

!(

!(

!(!(!(!(

!(!(

!(

!(!( !(!(

!(

!(

!(

!(

!(!(!(!(!(!(

!(!(!(

!(!(!(

!(!(!(

!(!(!(

!(!(!(!(

!(!(!(!(!(!(

Beech Grove

Carmel

Fishers

Speedway

Lawrence

Indianapolis


!( 0-4 deficiencies

!( 5-9 deficiencies


% Non-White

0% - 49%

50% - 100%



64

Kansas City, MO/KS

Memphis, TN

!(!(

!(!(

!(

!(!(

!(

!(

!(

!(!(

!(!(

!(

!(

!(!(!(!(!(

!(!(!(

!(!( !(

!( !(

!(!(

!(

!(

!(

!(

!(

!(!(!(

!(!(

!(

!(

Olathe

Lenexa

Raytown

ShawneeMerriam

Leawood

Grandview

Kansas City

Kansas City

Overland Park

Prairie Village


!( 0-4 deficiencies

!( 5-9 deficiencies


% Non-White

0% - 49%

50% - 100%



65

Las Vegas, NV

!(!(

!(

!(

!(

!(

!(

!(!(

!(

!(

!(!(

!(

!(!(!(

!(

!( !(!(

!(!(

!(!(!(

!(!(

!(

!(

!(

!(

!(

!( !(!(

!(

!(

!(

!(

!(

!(

!(!(!(

!(!(

!(

!(!(!(

!(

!(

Arden

Paradise

Las Vegas

Henderson

Winchester

East Las Vegas

North Las Vegas


!( 0-4 deficiencies

!( 5-9 deficiencies


% Non-White

0% - 49%

50% - 100%



66

Memphis, TN

Memphis, TN

!(

!(

!(

!(!(

!(

!(

!(

!(

!(!(!(

!(

!(

!(!( !(

!(

!(!(

!(

!(

!(

!(

!(

!(

!(!(

!(

!(

!( !(

!(

!(

!(

!( !( !(!(!(

!(

!(

!(

!(

!(!(

!(!(!(!(

!(

!(!(!(!( !(

!(

!(

!(

!(

!(

!(

!(

!(

!(

!(

!(

!(

!(

!(

!(

!(

!(!(

!(!(!(!(

!(!(

!(!(!(

!(

!(

Memphis

Bartlett

Millington

Germantown

Collierville


!( 1-4 deficiencies

!( 5-9 deficiencies


% Non-White

0% - 49%

50% - 100%



67

Miami, FL

!(

!(!(

!(

!(

!( !(

Deerfield Beach


!( 0-4 deficiencies

!( 5-9 deficiencies

!(10 or more deficiencies

% Non-White

0% - 49%

50% - 100%

!(!(!(

!(

!(

!(

!(!(!(

!(

!(

!(

!(

!(!(

!(!(!(!(

!(!(

!(

!(

!(

!(

!(

!(

!(

!(

!(

!(

!(!(

!(

!(

!(

!(

!(

!(

!(

!(!(!(!(

!(!(!(

!(!(!(!(

!(

!(

!(!(

!(!(!(

!(!(

!(!( !(

!(

!(!(

!(!(!(

!(

!(!(

!(

!(

!(

Miramar

Plantation

!(

!(

!(

!(

!(!(

!(

South Miami



68

Milwaukee, WI

Memphis, TN

!(

!(

!(

!(!(!(!(!(!(

!(!(

!(!(!(

!(!(

!(

!(

!(

!(

!(

!(!(

!(

!(!(

!(

!(!(!(

!(!(

!(

!(!(

!(

!(

!(

!(

!(!(!(!(

!(

!(!(

!(

!(

!(!(!(

!(!(!(

!(

!(

!(

!(!(!(!(!(

!(

!(!(

!(

!(

!(

!(

!(!(!(

!(!(

!(

!(

!( !(!(!(!(!(

!(

!(!(!(!(

!(

!(

!(!(

!(!(

!(!(!(

!(!(

!(!(!(

!(

!(!(

!(

!(

!(

!(

!(

!(!(

!(

!(!( !(

!(!(!( !( !(

!(

!(

!(

!(

!(!(

!(!(

!(!(

!(

!(!(

!(

!(!(

!(!(

!(

!(!(!(

!(!(

!(!(!(!(!(!(

!(!(!(!(!(

!(

!(

!(

!(!(

!(

!(!(!(

!(!( !(!(!(!(

!(!(!(!(

!(!(

!(

!(

!(!(

!(!(

!(

!(

!(!(

!(!(

!(

!(!( !( !(

!(

!(

!(

!(!(!(

!(

!(

!(

!(!(!(!(

!(

!(

!(

!(

!(

!(!(

!(!(!(

!(!(

!(

!(!(

!(!(!(

!(!(

!(!(!(!(

!(!(

!(

!(

!(!(!(

!(

!(

!(!(!(!(

!(

!(

!(

!(

!(

!(

!(

!(!(

!(!(

!(

!(!(

!( !(

!(

!(

!(!( !(

!(!(

!(!(

!(!(

!(

!(!(

!(

!(

!(

!(

!(

!(!(!(

!(!(!(

!(!(

!(!( !(!(

!(

!(!(

!(!(

!(

!(

!(

!(!(!(

!(

!(

!(!(

!(

!(

!(

!(!(!(!(!(!(

!(!(

!(

!(!(!(!( !(!(

!(!(

!(!(

!(!(!(

!(

!(

!(

!(!(

Lake Michigan

Milwaukee

Cudahy

Butler

Glendale

Wauwatosa

Shorewood

Greendale

Elm Grove

West Allis

Greenfield

Whitefish Bay

Saint Francis

Hales Corners

West Milwaukee


!( 0-4 deficiencies

!( 5-9 deficiencies


% Non-White

0% - 49%

50% - 100%



69

Muskegon, MI

!(

!(!(

!(

!(

!(

!(

!( !(

!(

!(

!( !(!(

!(

!(

!(

!(!(

!(

!(!(

Muskegon

Norton Shores

Muskegon HeightsMaintenance or Marketing Deficiencies

!( 0-4 deficiencies

!(5-9 deficiencies


% Non-White

0% - 49%

50% - 100%



70

New Haven, CT

Memphis, TN

!(

!(

!(

!(

!(!(

!(

!(!(

!(

!(!(

!(!(

!(

!(

!(

!(!(

!(

!( !(

!(!(!(

!(

!(

!(

!(

!(

!(

!(

!(

!(

!(

!(!(

!(

!(

!(

!(!(

Orange

New Haven

West Haven

East Haven

North Haven


!( 0-4 deficiencies

!( 5-9 deficiencies


% Non-White

1% - 49%

50% - 100%



71

New Orleans, LA

!(

!( !(

!(

!(

!(

!(

!(

!(

!(!(

!(

!(

!(!(!(

!(!(

!(

!(!(!(!(!(

!(!(!(!(

!(

!(!(

!(

!(

!(

!(!(

!(

!(

!(!(

!(

!(

!(

!(!(!(!(

!(

!(!(!(!(!(!(

!(!(

!(!(

!(!(

!(

!(

!(!(!(

!(

!(

!(

!(

Mandeville

New Orleans

Slidell


!(0-4 deficiencies

!( 5-9 deficiencies


% Non-White

0% - 49%

50% - 100%



72

Orlando, FL

Memphis, TN

!(!(

!(!(

!(

!(

!(

!(

!(

!(

!(

!(

!(

!(!(

!(

!(

!(!(

!(

!(

!(

!(

!(

!(

!( !(

!(

!(

!(

!(

!(

!(

!(

!(!(

!(

!( !(

!(!(

!(

!(

!(

!(

!(!(

!(!(!(

!(

!(

!(

Conway

Orlando

MaitlandLockhart

Oak Ridge

Goldenrod

Pine Hills

Winter Park

Azalea Park

Fairview Shores


!( 0-4 deficiencies

!( 5-9 deficiencies


% Non-White

0% - 49%

50% - 100%



73

Philadelphia, PA

!(

!(!(

!(

!(

!(

!(

!(

!(

!(

!(

!(

!(

!(

!(

!(!(!(!(

!(

!(

!(

!(

!(

!(

!( !(!(!(!(

!(!(!(!(!(

!(

!(!( !(

!(!(

!(!(

!( !(

!(

!(!(!(!(

!(!(

!(!(!(

!(

!(

!(

!( !(!(

!(

!(

!(!(

!( !(!(

!(!(!(

!(

!(!(!(!(!(

!(

Chester

Lansdale

Norristown

Philadelphia


!( 0-4 deficiencies

!( 5-9 deficiencies


% Non-White

0% - 49%

50% - 100%



74

Richmond and Oakland, CA

Memphis, TN!(

!(

!(

!(!(!(

!(!( !(

!(

!(

!(

!(

!(

!( !(

!(

!(

!( !(

!(

!(!(

!(

!(

!(!(

!(

!(

!(

!(

!(

!(!(!(

!(!(

!(

!(

!(!(!(!(

!(

!(!(!(!(

!(!(

!(!(!(!(!(!(!(

!( !(!(

!(!(

Orinda

Moraga

Albany

Oakland

Alameda

Richmond

Piedmont

Berkeley

San Pablo

Lafayette

El Cerrito

El Sobrante


!( 0-4 deficiencies

!( 5-9 deficiencies


% Non-White

0% - 49%

50% - 100%



75

Richmond, VA

!(!(!(

!(!(

!(

!(!(

!(

!(

!(

!(

!(!(!(

!(

!(!(

!(

!(

!(!(

!(

!(

!(

!(

!(

!(!(

!(

!(

!(!(

!(

!(

!(!(!(!(

!(!(!(

!(

!(

!(

Laurel

Bon Air

Tuckahoe

Richmond

Lakeside

Glen Allen

Mechanicsville

Highland Springs

East Highland Park


!( 0-4 deficiencies

!( 5-9 deficiencies


% Non-White

0% - 49%

50% - 100%



76

San Diego, CA

Memphis, TN

!(

!(!(

!( !(

!(!(

!(

!(

!(

!(

!(

!(

!(

!(

!(

!( !(!(

!(

!(

!(

!(!(!(

!(

!(

!(!(

!(

!(

!(!(!(

!( !(

Santee

Bonita

La Mesa

La Presa

El Cajon

Coronado

Bostonia

San Diego

Lemon Grove

Chula Vista

Spring Valley

National City

Winter Gardens

Imperial Beach

Rancho San DiegoCasa de Oro-Mount Helix


!( 0-4 deficiencies

!( 5-9 deficiencies


% Non-White

0% - 49%

50% - 100%



77

Toledo, OH

!(

!(

!(

!(

!(!(!(!(!(!(

!( !(

!(

!( !(!(!(

!(!(!(

!(!(!(!(

!(

!(!( !(

!(!(!(

!(

!( !(

!(!(

!(!(

!(!(

!(!(

!(

!(!(!(

!( !( !(!(!(

!(!(!(

!( !(!(

!(!(

!(

!(!(!(

!(!(

!(!(!(

!(

!(

!(

!(!(

!(!(!(

!(

!(!(

!(

!(!(!(

!(

!( !(!(!(!(!(!(!(!(!(!(

!(

!(!(!(

!(

!(

!(

!(

!(!(!(

!(

!(

!(

!(

!(

!(!(!(!(

!(!(

!(!(

!(!(!(!(!(

!(!(!(!(!(

!(!(

!(

!(

!(

!(

!(

!(!(

!(!(

!( !(

!(

!(!(

!(!(

!(

Toledo

Oregon

Maumee

Sylvania


!( 0-4 deficiencies

!( 5-9 deficiencies


% Non-White

0% - 49%

50% - 100%



78

Tucson, AZ

Memphis, TN

!(

!(!(

!(

!(

!(

!(!(

!(

!(!( !(

!(

!(

!( !(!(

!(

!(

!(!(

!(

!(

!(

!(

!(

!(

!(!(

!(!(!(

!(!(!(!(

!(!(!(

!(!(

!(

!(

!(

!(!(

!(

!(!(!(!(

!( !(!(

!(

!(!(

Tucson

Flowing Wells

Drexel Heights

Catalina Foothills

Maintenance or Marketing Deficiencies!( 0-4 deficiencies

!( 5-9 deficiencies


% Non-White

0% - 49%

50% - 100%



79

Vallejo, CA

!(

!(

!(!(

!(!(

!(

!(

!(

!(!(!(

!(

!(!(

!(!(!(

!(

!(

!(!(

!(

!(!(

!(!(

!(!(

!(!(

!(!(

!(!( !( !(

!(

!(

Vallejo

Benicia

!(

!(

!( !(

!(

!(

Novato

San Rafael

!( !(

!(

!(!(!(!(!(

!(

!(!(!(

!(

!(

!( !(

!(

!(!(!(!(

!(

!(

!(Vacaville

Suisun City


!( 0-4 deficiencies

!( 5-9 deficiencies


% Non-White

0% - 49%

50% - 100%



80

Washington, DC and Prince George’s County, MD

Memphis, TN

!(

!(

!(!(!(

!(

!(

!(

!(

!(

!(!(!(

!( !(

!(!(

!(

!(!(!(

!(

!(

!(

!(!(

!(!(

!(

o

Camp Springs

Capitol Heights

District Heights

!(

!(!(

!(

!(

!(!(!(

Bethesda

Rockville

Germantown

Gaithersburg


!( 0-4 deficiencies

!( 5-9 deficiencies


nonwhite / total0% - 49%

50% - 100%



81



Documents

NFHA: Zip Code Inequality