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Study: White Neighborhoods Get Better Treatment On Foreclosures Than Neighborhoods Of Color

An under-maintained home in a black neighborhood.
Miami Valley Fair Housing

Cities in Ohio and around the country are continuing to recover from the housing bust, but some neighborhoods may be having an easier time than others. A new study by the National Fair Housing Alliance (NFHA) finds banks are doing a better job with upkeep on foreclosed homes in white neighborhoods than neighborhoods of color.

NFHA worked with groups in 29 metro areas, including Dayton and Toledo, to inspect thousands of bank-owned homes.

“Properties in neighborhoods of color were neglected, they didn’t have the grass trimmed, they didn’t have trash picked up and the were not properly marketed,” says Jim McCarthy, head of  Miami Valley Fair Housing. Banks and lenders appeared to be maintaining properties in white neighborhoods much better, and working harder to sell them. In Dayton, buildings with damaged exteriors, broken or boarded doors, and messed-up utilities were concentrated on the largely-Black west side, and these factors were two or three times more likely to occur in neighborhoods of color.

Nationally, the study found 42.7 percent of real estate-owned (REO) properties in white neighborhoods were well taken care of, while in communities of color, the percentage was half that, just 21.7 percent. 

McCarthy says dilapidated bank-owned homes are a double-whammy after the housing crisis hit hard in many of the same areas.

“Generations of wealth have been stripped out of the neighborhoods,” he says.

These uneven practices have been the subject of at least one settlement—Wells Fargo paid out $42 million last year in response to an administrative complaint filed by NFHA and investigated by the U.S. Department of Housing and Urban Development. But U.S. Bank and Bank of America have disputed the claims, saying they aren’t legally responsible for many of the properties in question. In a statement, U.S. Bank says it has a strong process for maintaining properties it has access to, “regardless of their location.”

Lewis Wallace is WYSO's managing editor, substitute host and economics reporter. Follow him @lewispants.