Settlement brings $1.4 million to New Orleans and Baton Rouge communities
17th June 2013 · 0 Comments
By Fritz Esker
The Greater New Orleans Fair Housing Action Center, the National Fair Housing Alliance, and 13 of its member organizations announced a partnership with Wells Fargo Bank to provide funds in 19 cities, including New Orleans, to foster homeownership and assist with rebuilding neighborhoods of color affected by the foreclosure crisis.
This partnership is the result of a federal housing discrimination complaint filed in April 2012 with the U.S. Department of Housing and Urban Development (HUD). During the foreclosure crisis, numerous banks, including Wells Fargo, took control over many houses whose owners could no longer pay their mortgage. The banks would then be responsible for the upkeep of the house until a new owner was found.
A 2011 report by the United States Government Accountability Office stated that the number of non-seasonal vacant properties climbed from almost seven million in 2000 to 10 million in April 2010, with 10 states seeing increases of 70 percent or more.
The complaint alleged that Wells Fargo was attentively maintaining and marketing its real estate owned (REO) homes in predominantly white neighborhoods, while allowing its REO homes in predominantly African-American or Latino neighborhoods to fall into neglect. In these properties, the lawns would not be cut, the windows weren’t boarded up, and there was a generally high level of disrepair. The poor condition of these properties affected the values of neighboring homeowners, people who had done nothing wrong.
“Homeownership is the gateway to the American middle class, but hard-working homeowners have seen their equity stripped and values lowered because of too many foreclosed homes in their neighborhoods,” said James Perry, executive director of GNOFHAC.
As part of the agreement, GNOFHAC will administer a $1.4 million fund to increase neighborhood stabilization and homeownership in African-American communities in Baton Rouge and New Orleans. That amount comes from a total $27 million settlement paid to NFHA and local housing organizations in 19 cities.
Specific destinations for the funds in New Orleans and Baton Rouge have not yet been determined, but Morgan Williams, director of enforcement and investigation for the National Fair Housing Alliance, said many opportunities are being researched. He added that there will not be a one-size-fits-all solution and that funds will be distributed based on the specific individual needs of each community.
“The questions on how to spend it (the money) are endless,” Perry said. “We want to make sure we get the best effect for the community.”
Wells Fargo will also implement a number of policy changes due to the agreement. The bank will give owner-occupants higher priority over investors in purchasing REO properties. Previously, buyers who intended to live in the house would have priority over investors for a 12-day period. Now, that period has been extended to 15 days. Every time there is a price reduction in an REO home, a new five-day homeowner priority period for owner-occupants will begin.
The bank also promised to make it easier for people to get information about its REO properties. To accomplish this, Wells Fargo will improve its website and toll-free numbers to provide more information to prospective buyers and to allow more efficient communication if someone has a problem with an REO property or an agent who’s selling one.
To track how Wells Fargo maintains and markets its REO properties, a third party monitor will be employed to make sure the bank adheres to the standards set in the agreement.
According to the NFHA, the problem was not limited to Wells Fargo. In April 2012, they filed a similar complaint against U.S. Bank and in September 2012, they filed a complaint against Bank of America.
“It’s something we’ve observed in a lot of lenders in the country,” Williams said.
While the NFHA is pleased that Wells Fargo is working with them to correct housing discrimination issues, the organization feels that there is much work still to be done.
“Other banks should follow Wells Fargo’s lead and engage in broad relief to communities damaged by the foreclosure crisis,” said Shanna Smith, president and CEO of the NFHA. “This is a huge step in the right directions and more is needed to get our neighborhoods, especially communities of color, back on their feet.”
This article originally published in the June 17, 2013 print edition of The Louisiana Weekly newspaper.