Wells Fargo Settles Complaint on Foreclosed Homes

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The Washington Post
By: Danielle Douglas
June 6, 2013

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.

The settlement, reached Wednesday, is rooted in a Department of Housing and Urban Development complaint filed in April 2012 by the alliance. The advocacy group took action after conducting a year-long investigation that found homes 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.


As the number of foreclosures climbed in the aftermath of the housing crash, lenders scrambled to off-load properties, known as REOs, for "real-estate owned," that failed to sell at auction after borrowers defaulted. Foreclosures were rampant in minority neighborhoods, in part because of the high concentration of subprime loans in those areas. Communities have been eager to see these vacant properties sell because over time they can bring down property values and attract vagrancy and crime, consumer groups say.

"Many neighborhoods across the country have been seriously damaged by the foreclosure crisis," said Shanna Smith, president and chief executive of the National Fair Housing Alliance. "Our joint efforts will help lay the foundation for the industry to get some of those neighborhoods back on their feet."

Under the agreement, Wells Fargo, which did not admit any wrongdoing, will provide $27 million to promote homeownership, neighborhood stabilization and property rehabilitation in minority communities in 19 metro areas, including Prince George's County and the District.

Prince George's County was devastated by the collapse of the housing market. Roughly 7.4 percent of homes in the area, known for its concentration of affluent African Americans, were empty in the 2010 Census, compared to 4.6 percent in Prince William County, another hard-hit area.

Even as home prices rebound in Prince George's, the county still has some 51,000 foreclosed homes on its books, according to the Department of Environmental Resources.

In recent months, the county has seen an influx of investors eager to snap up cheap houses to rent out or flip. Would-be homebuyers across the country have complained that deep-pocketed investors have an unfair advantage in the bidding process.

For its part, Wells Fargo, according to the settlement, will give priority to owner-occupants who make offers that meet or exceed investor bids on its REO properties for the first 15 days the home is on the market. The bank currently gives owner-occupants a 12-day head start, but it plans to extend the time within the next 30 days, according to the housing alliance.

Wells Fargo has agreed to develop a fair housing training program for its employees who work with REO properties and the agents who sell them. The bank is committing $250,000 to the housing alliance to hold seminars on foreclosures, and another $300,000 for two conferences on fair housing.

"These agreements represent a significant commitment ... to invest in programs that will strengthen minority communities impacted by foreclosures," said J.K. Huey, senior vice president of Wells Fargo Home Mortgage. "We appreciate the perspectives and collaboration of NFHA and HUD in helping us shape these initiatives."

HUD has not issued any determination on whether Wells Fargo violated any fair housing laws.

The housing alliance still has two similar cases pending against Bank of America and US Bank, but negotiations have reached an impasse, according to the consumer group.

In a statement Thursday, Bryan Greene, HUD general deputy assistant secretary for fair housing and equal opportunity, said: "HUD, NFHA and Wells Fargo are committed to revitalizing and creating homeownership opportunities in minority communities devastated by foreclosures. Wells Fargo's investment demonstrates an ongoing commitment to stabilizing African-American and Hispanic neighborhoods in a way that advances equal housing opportunities, and HUD is committed to working collaboratively with Wells Fargo to support the effort."

http://www.washingtonpost.com/business/economy/wells-fargo-settles-complaint-on-foreclosed-homes/2013/06/06/18e55954-ce24-11e2-9f1a-1a7cdee20287_story.html

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