Wells Fargo has agreed to pay $42 million to settle a complaint filed in April 2012 by the National Fair Housing Alliance (NFHA) that alleged that Wells Fargo maintained and marketed its repossessed properties in white neighborhoods better than it did it in minority neighborhoods, the NFHA announced today.
The bank will fork over the money to the NFHA, 13 fair housing groups and the Department of Housing and Urban Development (HUD), which will use it primarily to support homeownership in minority neighborhoods impacted by the foreclosure crisis, according to the NFHA.
The NFHA has filed similar complaints against Bank of America and U.S. Bank., acting on an investigation it conducted that found that those lenders also seemed to tend to their REOs better in white neighborhoods.
The NFHA called the agreement with Wells Fargo the first of its kind “regarding the equal maintenance and marketing of REO homes,” which seems to suggest that the complaints it’s filed against the other two banks have not been settled.
“NFHA is looking forward to working in collaboration with Wells Fargo to make sure that all communities have a chance at a fair recovery,” said Shanna L. Smith, president and CEO of the National Fair Housing Alliance. “We are thrilled to see Wells Fargo’s renewed efforts and leadership in this area.”
As part of the deal, Wells Fargo will provide $27 million to the NFHA and 13 fair housing organizations, which will distribute the funds to 19 cities in order to promote homeownership, neighborhood stabilization, property rehabilitation and development in minority neighborhoods, the NFHA said.
The housing organizations will use the money to provide grants for purposes like down payment assistance and renovations for neglected foreclosed properties, according to the NFHA.
Wells Fargo has also agreed to pay $11.5 million to HUD, which will allocate the funds to neighborhoods in 25 cities, the NFHA said.
The lender also said that it will pay 13 housing groups and the NFHA $3 million to cover costs and damages, including those associated with the investigation into REO maintenance, according to the NFHA.
The NFHA said that Wells Fargo also has committed $300,000 for two national conferences and $250,000 to the NFHA and fair housing centers to hold seminars and assist distressed homeowners as part of the deal.
In April 2012, the NFHA revealed the results of an investigation aimed at determining if lenders did a better job maintaining and marketing homes in white neighborhoods than in minority neighborhoods.
The evaluation of more than 1,000 homes repossessed by lenders in nine markets found that properties in white communities “generally appeared inhabited, well-maintained, and attractive to real estate agents and homebuyers,” but that REOs in minority communities were “more likely to have overgrown yards littered with trash, unsecured doors, broken windows, and indications of marketing as a distressed sale.”
The findings of the investigation prompted the NFHA to file complaints against some major lenders, the first of which was Wells Fargo.
As part of the agreement, Wells Fargo has made a number of other commitments, according to the NFHA:
- to implement best practices for the maintenance and marketing of its REO properties under the supervision of a third party.
- to enhance its Homeowner Priority program to give owner-occupants higher priority over investors in purchasing REOs.
- to create a new five-day Homeowner Priority period every time there is a price reduction on a Wells Fargo REO home.
- to make it easier to get information about its REO properties.
- to develop a fair housing training program on REO issues for its employees who work on REO issues and for agents who sell Wells Fargo REO properties.
Do you think REOs seem better cared for in white neighborhoods?
