Wells Fargo has agreed to spend at least $42 million to settle claims that it neglected the maintenance and marketing of foreclosed homes in black and Latino neighborhoods across the country. The National Fair Housing Alliance announced the settlement last month. A year-long investigation by the advocacy group found that homes serviced by Wells Fargo in minority communities were far more likely than those in white areas to be left in disrepair, with broken windows, unkempt yards or water damage. These homes were also less likely to have for-sale signs than ones in predominantly white neighborhoods.
Under the agreement, Wells Fargo, which as expected did not admit any wrongdoing, will provide $27 million to nonprofit groups to promote homeownership, neighborhood stabilization and property rehabilitation in minority communities in 19 metropolitan areas, including Prince George’s County and the District of Columbia. It will also provide $11.5 million to the Department of Housing and Urban Development (HUD) to help 25 other cities. Shanna Smith, president and chief executive of the alliance, had this to say about the settlement:
Many neighborhoods across the country have been seriously damaged by the foreclosure crisis. This agreement will help lay the foundation for the industry to get some of those neighborhoods back on their feet.
The agreement addresses one of the lingering scars of the housing crisis. As the number of foreclosures climbed in the aftermath of the housing crash, lenders scrambled to offload foreclosed properties, with many piling up in minority neighborhoods where there was a high concentration of subprime loans. Consumer groups point out that communities have been eager to see these vacant properties sold because over time they can bring down property values and attract crime.
For example, areas such as Prince George’s are still struggling to rebound. About 7.4 percent of homes in that area, known for its concentration of affluent African Americans, were empty in 2010, according to the Census Bureau. This compares with 4.6 percent in Prince William County, another hard-hit area. Even as home prices rise in Prince George’s, the county still has about 51,000 foreclosed homes on the market, according to the county Department of Environmental Resources.
The settlement agreement resolves an April 2012 complaint that the advocacy group filed with HUD. While HUD did not rule on whether Wells Fargo violated any fair housing laws, the agreement will close the case. As part of the agreement, Wells Fargo agreed to give borrowers who plan to live in a home after the purchase priority in the bidding process over investors eager to buy up cheap houses to rent out or flip. Traditional buyers will get more time before investors, which has increasingly included Wall Street firms, are allowed to make an offer. That’s a good thing and hopefully it will pay off for persons who want to be homeowners.
Wells Fargo also agreed to develop a fair housing training program for its employees and the real estate agents who sell foreclosed properties. In addition, Wells Fargo is giving $250,000 to the housing alliance to sponsor seminars on foreclosure prevention and $300,000 to hold two conferences on fair housing laws. The housing alliance has filed two similar complaints against Bank of America and U.S. Bank. But, according to reports, it appears negotiations in those cases have reached an impasse. Interestingly, and predictably, both banks have denied the group’s allegations. Stay tuned!
Source: Washington Post
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