The U.S. housing market has been hit hard over and over again since the subprime mortgage bubble burst. Several years later, things have yet to look up. (See: The Housing Market Sucks — And Could Take Years to Correct)
Today RealtyTrac reported foreclosure activity actually slowed by 15% in the first quarter of this year from last quarter to nearly 700,000 foreclosures. And, that drop was 27% lower when compared to the same period in 2010.
But as The Daily Ticker has reported before, bad news lies beneath these seemingly rosy numbers.
"[The housing market] is still facing the dual threat of a looming shadow inventory of distressed properties and the probability that foreclosure activity will begin to increase again as lenders and servicers gradually work their way through the backlog of thousands of foreclosures that have been delayed due to improperly processed paperwork," said James Saccacio, chief executive officer of RealtyTrac.
To add insult to injury, as foreclosures continue to flood the market, a new report by the National Fair Housing Alliance — a civil rights group — shows that banks are not treating all real estate owned (REOs), or bank owned, foreclosure properties equally.
"In African American neighborhoods, these REO homes, the curb appeal is horrible, [banks] are not mowing the lawns, they are not raking the leaves, they are letting mail accumulate and fall out of mail boxes, they are letting gutters and down spouts be broken and do damage to foundation of homes or roofs of the homes," Shanna Smith, NFHA President and CEO tells Aaron in the above interview. "And, yet when we looked at the homes in the white neighborhoods you could not even tell they were a foreclosed property."
Wells Fargo is one mortgage holder named in the NFHA report that received an "F for all seasons" rating for neglecting a property that had been a target of arson month over month. In the above interview Smith gives a startling account of the negligence.
The report looked at 624 bank-owned properties in Ohio, Connecticut, Maryland and Virginia. The impact of the alleged discrimination is two fold:
#1 — Wealth loss in communities of color
#2 — Erosion of the property tax base and high costs to municipalities
"By failing to maintain properties in African-American neighborhoods in the same way that they maintain similar properties in white neighborhoods, banks are undervaluing properties and helping to stall economic recovery in our nation's neighborhoods of color," Smith says. "Banks that own foreclosed homes have a fiduciary duty to their investors to secure a fair price for the homes, and they have an obligation to neighborhoods and communities to maintain those homes."
The National Fair Housing Alliance, along with three sister organizations, allege that the banks scrutinized in their investigation are in violation of the Fair Housing Act, which states that it is illegal for banks to discriminate base on race, sex, religion or nation of origin.
For more on housing, see also:
- real estate owned
- Wells Fargo
- African American neighborhoods
- fiduciary duty