Last week, the National Fair Housing Alliance (NFHA) released a report: The Banks are Back, Our Neighborhoods are Not. The report examines how foreclosed housing is treated in white communities versus communities of color. The NFHA focused on Real Estate Owned (REO) single family housing: homes that went through the foreclosure process and are now owned by the banks.
Banks are not typically interested in owning property, so nearly all REO homes assumed vacant and for sale. According to the NFHA’s report, REO housing in communities of color is more likely to be in bad condition than REO housing in white communities. It is less likely to be properly signed or marketed to potential purchasers. Poor property maintenance will directly affect who will buy it. The way that banks market REO homes will have a direct affect on the surrounding community.
The foreclosure crisis has impacted communities of color on a greater scale than white communities, in part due to a racial targeting in the subprime mortgage market. “The Banks are Back, Our Neighborhoods are Not” shows that these communities of color are still experiencing foreclosure crisis at disproportionate levels. It also demonstrates how the Fair Housing Act is being violated by these discrepancies. According to NFHA, information from this study will be used in lawsuits and Housing and Urban Development administrative complaints for failing to uphold the Fair Housing Act statutes.
In our work we haven’t come across many multifamily REO properties. (In New York, there is no shortage of slumlords willing to buy run-down buildings.) However, we have seen how foreclosure is a greater burden to communities of color. Like the National Fair Housing Alliance, we believe that the lending community must be held accountable for its role in the foreclosure crisis, and join with the National Fair Housing in calling for banks to look closer at their lending practices and how they affect all communities.
Read the full report at the National Fair Housing Alliance.