"Wells Fargo settles neglect complaint" by Danielle Douglas | Washington Post, June 07, 2013
WASHINGTON — Wells Fargo has agreed to spend at least $42 million to settle allegations that it neglected the maintenance and marketing of foreclosed homes in black and Latino neighborhoods across the country, the National Fair Housing Alliance announced Thursday.
A yearlong 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 home were also less likely to have for-sale signs than ones in predominantly white neighborhoods.
Under the agreement, Wells Fargo, which did not admit wrongdoing, will provide $27 million to nonprofit groups to promote homeownership, neighborhood stabilization, and property rehabilitation in minority communities in 19 metropolitan areas. It will also provide $11.5 million to the Department of Housing and Urban Development to help 25 other cities.
‘‘Many neighborhoods across the country have been seriously damaged by the foreclosure crisis,’’ said Shanna Smith, president and chief executive of the alliance. 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. Communities have been eager to see these vacant properties sold because over time they can bring down property values and attract crime, consumer groups say.
"Much of the demand has come from investors. Sales to first-time buyers remain below healthy levels. Another reason prices are rising is the supply of available homes for sale remains extremely low. In January, it reached a 13-year low."
"The turnaround can be attributed to rising property values, pushed by a tight housing inventory and eager buyers motivated by low interest rates and generally upbeat news about the economy. The Massachusetts housing market continues to outperform the nation as a whole. But the problem is actually larger than the statistics indicate. Nearly 34 percent of Boston-area homeowners have an “effective” negative equity rate. While increased sales and rising prices have prompted bidding wars in many popular Boston-area neighborhoods, negative equity is a serious damper on the market in some parts of the state."
"Limited inventory of houses on the market combined to push up values. The steep price increase comes as the number of homes sold dropped again."
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The agreement, reached Wednesday, resolves an April 2012 complaint that the advocacy group filed with HUD. HUD did not rule on whether Wells Fargo violated any fair housing laws, but the agreement closes 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 snap 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....
Both banks denied the group’s allegations. In a statement, Bank of America, said, ‘‘We strongly deny NFHA’s allegations and stand behind our property maintenance and marketing practices.’’
US Bank said it does not service some of the homes identified by the group. ‘‘When we do own a property, we have a strong and comprehensive process in place to regularly inspect and maintain properties to marketing standards where we have legal access, regardless of their location,’’ the company said.