Fair Housing Group to File Discrimination Complaint Against U.S. Bank

A group of fair housing advocates said Tuesday it plans to file a discrimination complaint against U.S. Bancorp (USB), claiming the bank failed to maintain and market real estate-owned properties in minority neighborhoods.

The National Fair Housing Alliance plans to file an administrative complaint with the Department of Housing and Urban Development against Minneapolis-based U.S. Bank for treating foreclosed homes "differently based on the racial composition of the neighborhood," according to the complaint. Last week the group filed a similar complaint against Wells Fargo (WFC).

By focusing on foreclosed homes, the alliance is putting a new spin on the allegations of discrimination that consumer advocates have previously brought under the Fair Housing Act. Its complaint marks the first time that banks with large numbers of foreclosed properties have faced allegations of systematically failing to clean up and specifically post 'For Sale' signs in minority communities at the same rate that they do in white communities.

"When you maintain a property differently because of race or origin, you violate the Fair Housing Act," Shanna Smith, chief executive of the National Fair Housing Alliance, said during a Tuesday press conference. "When you see some of these houses, you see that they discourage or make unavailable or deny housing to people."

The National Fair Housing Alliance looked at 177 REO properties owned by U.S. Bank in seven cities: Atlanta, Baltimore, Chicago, Dayton, Ohio, Miami, Oakland and Washington, D.C. The group conducted an investigation last year of 1,000 REO properties and released a report detailing how lenders discriminate in the treatment of foreclosed homes.

Smith said the group did not file specific complaints last year but rather decided to give banks "a little time" to look at their REO properties and fix the problem. That did not happen, she said.

Teri Charest, a spokeswoman for U.S. Bancorp, says the bank has not received "a single detail on the properties in the complaint." Without knowing the addresses of the homes, she says, "it's impossible to know the rightful owner, the servicer or the condition of the property."

Because U.S. Bancorp is one of the largest corporate trustees for private mortgage securitizations, it may "have no role in servicing or maintaining the property," Charest says. Banks that serve as trustees say they have no authority to manage the underlying properties in the securities.

Smith said at the press conference Tuesday that her group was able to identify ownership of the dilapidated REO homes through county records and by purchasing data from third-party providers.

"The properties are all owned by U.S. Bank," said Smith, who showed a PowerPoint presentation of REO homes with piles of trash, broken doors and windows, and overgrown grass.

"Surely the head of U.S. Bank will be surprised at this behavior and will be appalled at what they see," she said.

The Fair Housing Alliance filed a similar complaint last week against Wells Fargo, alleging discrimination under the Fair Housing Act. That complaint alleged that Wells has a "systemic and particularized practice of engaging in differential treatment in maintaining and marketing its REO properties on the basis of race, color and/or national origin."

Since filing that complaint, Smith said the group is "in a dialogue" with Wells Fargo.

Wells spokesman Tom Goyda says the San Francisco bank conducts all lending and servicing-related activities in "a fair and consistent manner without regard to race," which includes "maintenance and marketing standards for all foreclosed properties for which we are responsible."

Goyda said the Fair Housing Alliance's complaint "does not include specific property information that can allow us to investigate the circumstances in any of the markets they list."

The Fair Housing Alliance is still investigating other lenders and asset managers, she says, adding that Bank of America (BAC) "reached out" to the group in January and currently is "in discussions" with them. No complaint has been filed against B of A.

The Charlotte bank did not immediately respond to a request for comment.

"The goal is to get people to change their poor practices and their discriminatory practices," Smith said. "We are happy to sit down in the HUD conciliation process to get these issues addressed.