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Oct 24 2012

How White America Prospers

Regardless of class status, in free market/free enterprise Americana, even in the midst of foreclosure and recession:

From the Sacramento Bee:

“Today, the National Fair Housing Alliance (NFHA), announced a federal housing discrimination complaint against Bank of America Corporation, Bank of America, N.A., and BAC Home Loan Servicing, LP. This complaint is the result of an undercover investigation of Bank of America that found the financial giant maintains and markets foreclosed homes in White neighborhoods in a much better manner than in African-American and Latino neighborhoods in Chicago, Milwaukee and Indianapolis.

Today’s complaint was filed with the US Department of Housing and Urban Development and is part of an amended complaint NFHA and seven member agencies filed October 10 that looks at how Bank of America has differently maintained and marketed properties in White, African-American, and Latino neighborhoods across the country…The investigation in 13 cities of 505 foreclosed homes owned, serviced or managed by Bank of America demonstrates that it has engaged in a systemic practice of maintaining and marketing its foreclosed, bank-owned homes (also known as Real Estate Owned or REO properties) in a state of disrepair in communities of color while maintaining and marketing REO properties in predominantly White communities in a far superior manner.  The investigation has evaluated Bank of America REO properties in 13 cities including Atlanta, Charleston, SC, Chicago, Dallas, Dayton, OH, Grand Rapids, MI, Indianapolis, Miami/Fort Lauderdale, Milwaukee, Oakland/Concord/Richmond, CA, Orlando, Phoenix and the Washington, DC area.

Communities of color continue to experience foreclosure rates twice that of White communities and continue to see their REO properties left to deteriorate and sit vacant.”

9 comments

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  1. 1
    smrnda

    Great point. This really slams the libertarian and conservative talking point that the only barrier for minorities is legally sanctioned official discrimination. The reason our legal institutions are and have been racist is because people (especially those with money and power) have been racist.

    1. 1.1
      Dalillama, Schmott Guy

      Oh yeah. The last libertarian I was arguing with responded to being told about redlining by insisting that new financial institutions would magically appear in black neighborhoods to serve their needs, because markets. He continued to insist on this even when I pointed out that that hadn’t occurred, because Austrian Economics requires it so.

  2. 2
    SallyStrange

    Redlining never died, it just went underground…

  3. 3
    Cameron

    Could it be explained by differences in home value (taking better care of more valuable homes)? I’m not trying to defend them, it’s just that usually when a megacorp is misbehaving, it’s for the sake of profits.

  4. 4
    Leo Buzalsky

    I feel like I’m experiencing some déjà vu. Did Wells Fargo (or another bank) perhaps get into trouble over something similar?

  5. 5
    harrysanborn

    I suspect that they are more aggressive and less compromising in these instances when considering alternatives to foreclosure. That seems like it would be a bigger travesty.

    When considering investment in these properties, I think we have to look at it from an investment point of view. What is the cost of maintaining these properties at a certain level, and what is the cost of improving them? Then compare that with the value they think they can extract in a sale. They aren’t going to invest heavily in a property if they can’t get their money back on a sale.

  6. 6
    F [is for failure to emerge]

    Home value/investment/profit: Wow.

    You know you can invest differentially according to value, or maybe just not allow properties to become dilapidated? You realize that Black and Latino people don’t, like, just go around destroying their neighborhoods and homes? You realize that there is also a differential in the initial loans foreclosed upon, unless the lender was jacking the client around, yes?

    Profit comes in letting the area die, then redeveloping for purposes of gentrification.

    1. 6.1
      harrysanborn

      I do, indeed know that one can invest differently. But in many instances, the cost of repair or maintenance far outstrips any return a financial institution might get back. Further, these institutions are trying to maximize profits. If they think spending their money on higher value homes will net a higher ROI, they will.

      1. Dalillama, Schmott Guy

        There are a lot of assumptions built into this claim, many of which are false/inaccurate. Most notably, the monetary value of a house is determined basically arbitrarily by the appraisers working for various financial institutions. There is no oversight to speak of in this process, and homes in black neighborhoods are routinely valued by appraisers at massively lower rates than similar homes in white neighborhoods. Thus, homeowners in the black neighborhoods are unable to finance repairs, upkeep, or improvements in their homes by borrowing against the home’s value, leaving homes in a state of ongoing deterioration. Most of the homes will not be owned by the residents, however, because due to redlining, residents of those neighborhoods are unable to get loans even for the depreciated values of the homes nearby, so absentee landlords buy them up and rent them at exorbitant rates. These landlords typically can afford to keep up the houses/apartments, but don’t, because that would reduce their profit margins. The lending institutions have no stake in that,wouldn’t be involved in the upkeep. The landlords typically rent the units until the fall apart completely, then set fire to them and collect the insurance money. The now vacant lot defaults to the city, and rots, or is sold at a cut rate to another absentee landlord who will put up a new slum and repeat the process.

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