Claim that Bank of America takes better care of foreclosed properties in white neighborhoods than in minority neighborhoods

A new report from the National Fair Housing Alliance argues Bank of America has taken better care of foreclosed properties in white neighborhoods:

A year ago, the alliance and several of its member organizations filed a complaint against the bank with the Department of Housing and Urban Development, arguing that the bank had violated the federal Fair Housing Act by neglecting foreclosed properties in minority communities in Denver, Atlanta, Miami, Dayton and Washington, D.C. Today, the groups amended their complaint with a stack of evidence – in maps, data, and photos – showing that the problem has persisted in each of those cities, while documenting it anew in Memphis, Denver, Las Vegas, Tucson and Philadelphia.

In total, housing advocates have now identified the problem in 18 metropolitan areas, across 621 Bank of America properties…

The sample size in each city varied, from about a dozen properties to more than 44 of them in Denver. But across all of the cities, homes in minority communities were two times more likely than those in predominantly white areas to have more than 10 maintenance or marketing problems. In Denver, homes in minority neighborhoods were 9.3 times more likely to have a broken door or lock. In Las Vegas, they were 4.5 times more likely to have damaged windows. In Philadelphia, they’re twice as likely to have accumulated substantial amounts of trash, relative to homes in white neighborhoods in the same market.

The pattern suggests yet another way that subtle housing discrimination may further handicap the ability of minority communities to recover from the housing crisis (or, put another way, this suggests why the effects of the recession will linger in minority communities for much longer). Federal fair housing law prohibits actions (or attempts at action) that “perpetuate, or tend to perpetuate, segregated housing patterns,” or that obstruct the choices in a community or neighborhood. It’s not hard to envision how these neglected homes could wind up doing just that.

Bank of America responded that the methodology of the study was flawed and that some of the homes in more disrepair were the responsibility of other entities.

More broadly, this suggests a potential new line of research questions about how banks and financial institutions respond after an economic crisis and whether this is stratified by race and class. How have banks made decisions regarding which foreclosed properties to improve or leave to others? Have they primarily worked with more valuable pieces of property, ones that might be found more often in middle to upper class neighborhoods? Is there also more political pressure (from local homeowners to municipalities) to address these more expensive homes or places with higher property values? It also seems like the analysis here would benefit by looking at the actions of multiple mortgage holders to see if there is a pattern across institutions.

Judge rules against man who wanted to claim Texas McMansion through adverse possession

Last July, I wrote about a Texas man who claimed he could occupy an abandoned McMansion and then claim possession of the home after a certain amount of time. His “adverse possession” case has moved forward as a judge ruled that the bank can indeed remove him from the home:

Anyone who was rooting for the man who used Texas’ adverse possession law to snag a McMansion for only $16 will be bummed to hear that he’ll be forced to leave the home after Bank of America claimed ownership of it. Drat!

Kenneth made waves in Flower Mound, Texas in July when he claimed the right to take over a $340,000 home in suburban Dallas, after filing a simple document and paying $16 to the city. He cited a law which said he could legally take possession of the house after living there for three years. His neighbors grumbled while he watered the lawn and paid utility bills, and now a judge says he has to move by Valentine’s Day.

The Associated Press says Bank of America can boot Kenneth, as they hold the lien on the house. Foreclosure was completed last month, says BOA, and now it’s time for Kenneth to vacate the premises…

“I’m just thankful for Flower Mound and Denton County for following the proper lawful procedures,” [Kenneth] said. “I went in doing this strictly by following a lawful process.” And now that the process has played itself out, he says, “I’m neither happy nor disappointed.”

I would venture to guess that Bank of America and some other people paid special attention to this case in order to forestall efforts by others who might be interested in using adverse possession to claim homes.

It would be helpful to have more information here:

1. Are the neighbors now happy that the home has officially gone through foreclosure? Did Kenneth make peace with any of the neighbors?

2. Does Bank of America have a quick timetable for moving this house to the market and selling it or will it be another home that languishes while the bank decides whether to accept offers?

3. Has Flower Mound changed its rules yet, like perhaps upped the $16 application fee, in order to avoid cases and attention like this in the future?

4. Where will Kenneth live next?

Foreclosure as legal remedy reports about a Florida couple who foreclosed on a bank (yes, you read that right):

It started five months ago when Bank of America filed foreclosure papers on the home of a couple, who didn’t owe a dime on their home.

The couple said they paid cash for the house.

The case went to court and the homeowners were able to prove they didn’t owe Bank of America anything on the house. In fact, it was proven that the couple never even had a mortgage bill to pay.

Not surprisingly, homeowner Maurenn Nyergers ran up some costly legal bills defending herself against Bank of America’s egregious mistake, and the judge quite reasonably ordered BoA to pay Nyergers’ legal fees.  This is where things got interesting:

After more than 5 months of the judge’s ruling, the bank still hadn’t paid the legal fees, and the homeowner’s attorney did exactly what the bank tried to do to the homeowners. He seized the bank’s assets.

Additional coverage (and pictures) at the Daily Mail.

Lots of news and blog commentators are talking about this story with phrases like “sweet justice” and “very satisfying”, but I think several other lessons can be drawn from this story.

1.  Foreclosure is a very powerful legal remedy.  Cash can disappear, cars and boats can move, but land and buildings (generally) stay put.  Nothing gets an owner’s attention like the prospect of losing their real estate.  It’s amazing how fast BoA paid up once they realized a local branch was threatened.

2.  Foreclosure is open to everyone.  “Equal justice under law” is sadly an ideal not always present in the real world.  Nonetheless, this story illustrates how anyone owed money can use it to get paid.  “The system” does sometimes work!

3.  “An ounce of prevention is worth a pound of cure.”  Consider all of the opportunities BoA had for this to be a non-issue:

  • They could have double-checked their paperwork to see if a mortgage existed before filing a lawsuit.
  • They could have double-checked their paperwork after filing their lawsuit.
  • They could have settled quietly with the homeowner after they realized their error instead of forcing a court to rule against them.
  • They could have paid their bill quickly to avoid further embarrassing publicity.

Instead, of course, BoA has created a national news story that makes it look disorganized, bullying, and a deadbeat.