Foreclosed homes in non-white areas get fewer repairs, complaint says
Baltimore was the worst of three cities cited in discrimination allegations against Fannie Mae contractor Cyprexx
Above: Weeds and crumbling cement at a vacant Baltimore foreclosure property cited in the complaint.
A national housing advocacy group looking at vacant foreclosed homes being maintained by Fannie Mae contractor Cyprexx Services LLC say there are stark and systematic differences, comparing the company’s performance in white vs. non-white neighborhoods.
“You rarely see a boarded-up window in a white neighborhood,” said Shanna L. Smith, of National Fair Housing Alliance (NFHA), which has filed a four-state complaint with the U.S. Department of Housing and Urban Development against Florida-based Cyprexx. The properties may be vacant, she said, but they are well-kept.
By contrast, in non-white areas, the group found not only boarded windows but weeds, dead shrubs and tall grass, unsecured doors, broken steps and railings, holes, vermin and piles of trash. The trend was most pronounced in Baltimore, although the group also looked at Kansas City, Orlando, Fla., and Richmond, Va.
Of the 20 Baltimore vacant properties in black neighborhoods in the study, 16 had dead or overgrown shrubbery. Only one of the Cyprexx properties in white neighborhoods did. (Source: National Fair Housing Alliance.)
“They were clearly at the top of the list,” Smith said.
Asset Protection and Curb Appeal
The complaint, filed yesterday, alleges that Cyprexx violated the Fair Housing Act by maintaining Fannie Mae-owned or controlled Real-Estate-Owned properties (REOs) in a state of disrepair in predominantly African-American, Latino or other non-white communities, while maintaining them in predominantly white communities in materially better condition.
In predominantly white Pasadena, the foreclosed vacant properties looked like this. (Source: National Fair Housing Alliance)
Phone calls and an email to Cyprexx were not returned.
Smith said her group, which last year filed similar complaints against two other Fannie Mae contractors – Safeguard Properties and Asset Management Specialists – is holding Cyprexx to its minimal obligations under federal law.
“We’re not talking granite counter-tops,” she said in an interview with The Brew.
“We’re talking about basic maintenance . . . maintaining the asset and curb appeal.”
“It’s mowing the lawns. Making sure the gutters and downspouts are clear so water doesn’t back up and cause roof damage,” Smith continued, calling the matter “a business issue as well as a civil rights issue.”
A Study in Black and White
In Baltimore, the group investigated 26 Fannie Mae properties in the city and suburbs serviced by Cyprexx – including 20 in predominantly African-American communities and six in communities that were predominantly white. They conducted their research in 2011, and 2012 and returned a few months ago to confirm it, Smith said.
Among their findings cited in the complaint:
• 33% of properties serviced for Fannie Mae by Cyprexx in predominantly white communities had zero deficiencies, while none of those investigated in black communities were deficiency-free.
Racial disparities alleged in Baltimore include this from the National Fair Housing Coalition’s Power Point.
• 75% of the Fannie Mae/Cyprexx properties in black communities had three or more deficiencies, while only 16% of white communities had more than three documented.
• 30% in black communities had five or more deficiencies, compared to zero in the white communities.
• 80% of the properties in black areas, or 16 of the 20, had weeds or dead shrubbery, while only one of the properties in white neighborhoods did.
Government’s Responsibility
The National Fair Housing Coalition and its member organizations have been targeting not just Fannie Mae, but other government and private lenders responsible for the nation’s vast inventory of foreclosed homes as a result of the housing market collapse.
The entities they have filed complaints against include Bank of America, Deutsche Bank and U.S. Bank, with some responding better than others, according to Smith.
“Freddie Mac has made improvements – they implemented a new business model,” Smith said. “You can tell a Freddie Mac home now. It has a sign and it’s clean.”
By contrast, she said, Fannie Mae has made few changes.
“We haven’t had a working partnership with them since we filed against Safeguard,” she said. “They haven’t been in communication with us since the spring of 2013. You would think they would be very concerned.”
Last year, Wells Fargo agreed to pay more than $40 million to settle a complaint brought by the group alleging poor maintenance of foreclosed properties in minority neighborhoods.
Smith said city governments could take similar action against lenders and their maintenance contractors. “They could document this. They have the data,” she said. “They have the police fire and rescue calls. They have the nuisance abatement calls.”
Map showing Cyprexx-maintained houses in the Baltimore area. (Source: National Fair Housing Coalition)
“Devastating” Impact on Neighborhoods
The impact of vacant blighted foreclosure properties on cities like Baltimore, she said, is huge.
“In neighborhoods that used to have high home ownership, and now you see six, seven, eight boarded-up homes and these banks and Fannie Mae are just not taking care of them and that for the neighbors is just devastating,” Smith said. “Their property values go down, they can’t get loans, they can’t sell their houses.”
Visiting the vacant homes, investigators saw and heard the rats scurrying about in the grass and weeds and heard about the misery of living next-door to one of them from neighbors.
“The neighbors said, ‘Don’t go to the yard, it’s full of fleas,’ but the investigators went anyway – they got all bitten up.”
Asked why she thought contractors cut corners in poor minority neighborhoods, Smith speculated that they believe no one will complain.
“In the white neighborhoods, they get nervous. They think someone might report them to Congress,” Smith said.