Ground-Breaking Fair Housing Agreement in Marketing and Maintenance of Foreclosed Properties

WASHINGTON, DC – Today the Greater New Orleans Fair Housing Action Center (GNOFHAC), the National Fair Housing Alliance (NFHA) and 13 of its member organizations announced a partnership with Wells Fargo Bank, N.A. that will provide funds in 19 cities to foster homeownership, assist with rebuilding neighborhoods of color injured by the foreclosure crisis, and promote diverse, inclusive communities.

This is the first-ever agreement regarding the equal maintenance and marketing of Real Estate Owned (REO) homes. The agreement is the result of a federal housing discrimination complaint filed in April 2012 with the U.S. Department of Housing and Urban Development (HUD).  The complaint alleged that Wells Fargo’s bank-owned properties in white areas were much better maintained and marketed by Wells Fargo than REO homes in African-American and Latino neighborhoods.

As a result of the agreement, GNOFHAC will administer a $1.4 million fund to increase homeownership and neighborhood stabilization in communities of color in the Baton Rouge and New Orleans areas. Nationwide, Wells Fargo will provide a total of $27 million to NFHA and the 13 local non-profit fair housing organizations to benefit 19 cities and promote home ownership, neighborhood stabilization, property rehabilitation, and development in communities of color.

“Homeownership is the gateway to the American middle class, but hard-working homeowners have seen their equity stripped and values lowered because of too many foreclosed homes in their neighborhoods,” said James Perry, Executive Director of GNOFHAC.  “We appreciate Wells Fargo’s commitment to help us improve communities in Baton Rouge and New Orleans and look forward to working with them.”

“NFHA is looking forward to working in partnership with Wells Fargo to make sure that all communities have a chance at a fair recovery,” said Shanna L. Smith, President and CEO of the National Fair Housing Alliance. “We are thrilled to see Wells Fargo’s renewed efforts and leadership in this area.”

The 19 geographic areas included in the agreement with NFHA are: Atlanta, GA; Baltimore and Prince George’s County, MD; Baton Rouge, LA; Charleston, SC; Metropolitan Chicago, South Cook County, IL; Oakland and Richmond, CA; Dallas, TX; Denver, CO; Dayton, OH; Grand Rapids, MI; Indianapolis, IN; Miami, FL; Milwaukee, WI; Orlando, FL; Philadelphia, PA; Toledo, OH; and Washington, DC.

Real Estate Owned properties are homes that have gone through foreclosure and are now owned by banks, investors, Fannie Mae, Freddie Mac, the Federal Housing Administration, or Veterans Affairs.

“Many neighborhoods across the country have been seriously damaged by the foreclosure crisis, including the impact of REO homes on property values, curb appeal, and tax revenue for schools,” said Shanna Smith. “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 has made a number of very important commitments that will benefit communities throughout the United States, including the following:

• Wells Fargo will pay $27 million to NFHA and the 13 fair housing organizations to assist 19 cities to promote home ownership, neighborhood stabilization, property rehabilitation, and development in communities of color.  
• Wells Fargo will implement best practices for the maintenance and marketing of its REO properties. A third party will monitor Wells Fargo’s portfolio of REO properties to ensure that Wells Fargo maintains and markets its REO properties according to the standards set forth in the agreement.
• Wells Fargo will enhance its Homeowner Priority program to give owner-occupants higher priority over investors in purchasing REOs. Wells Fargo will extend its Homeowner Priority period so that owner-occupants will have priority over investors to purchase Wells Fargo REO properties until the fifteenth day a property is on the market rather than the current twelve-day period.
• Wells Fargo will create a new five-day Homeowner Priority period every time there is a price reduction on a Wells Fargo REO home. Wells Fargo will give priority to owner-occupants who make offers that meet or exceed the price of offers from those who do not intend to live in the home.
• Wells Fargo will make it easier to get information about its REO properties. Wells Fargo will improve its web site and toll free numbers to provide more information to prospective purchasers and anyone who wants to tell Wells Fargo about a problem with an REO property or an agent who is selling a Wells Fargo REO property.
• Wells Fargo and NFHA will sponsor two conferences designed to bring together approximately 100 industry and non-profit housing and real estate participants and regulatory agencies to discuss fair housing and its intersection with other current housing issues, including short sales, abandoned properties, REO maintenance.
• In consultation with NFHA, Wells Fargo will develop a fair housing training program on REO issues for its employees who work on REO issues and for agents who sell Wells Fargo REO properties.

In addition to the $27 million to promote homeownership, Wells Fargo will pay $3 million to NFHA and the 13 fair housing organizations for costs and damages, including diversion of resources incurred in connection with the investigations, and attorney fees. Wells Fargo is also committing $300,000 for the two national conferences and $250,000 to NFHA and local fair housing centers to hold seminars and address delinquencies and foreclosures.

Under the agreement, Wells Fargo will provide an additional $11.5 million to HUD to support neighborhoods in an additional 25 cities.  Those cities are Austin, TX, Bakersfield, CA, Detroit, MI, Fort Lauderdale, FL, Fresno, CA, Houston, TX, Kansas City, MO, Las Vegas, NV, Los Angeles, CA, Memphis, TN, Modesto, CA, New York, NY, Phoenix, AZ, Riverside, CA, Sacramento, CA, San Antonio, TX, San Diego, CA, San Jose, CA, Santa Ana, CA, St. Louis, MO-IL, Stockton, CA, Tampa, FL, Vallejo, CA, Virginia Beach, VA, and West Palm Beach, FL.

The National Fair Housing Alliance and 13 local fair housing organizations are represented by Joseph M. Sellers and Peter Romer-Friedman of Cohen Milstein Sellers & Toll PLLC.

“This groundbreaking settlement is a testament to the fair housing movement’s vision and dedication to the promise of equality for all communities,” said Romer-Friedman, who represented the fair housing organizations in the action and settlement talks.  “This settlement will ensure that every community shares in the fruits of the housing recovery now underway.”

NFHA and its members have two similar housing discrimination complaints pending against US Bank and Bank of America, filed in April 2012 and September 2012 respectively.

“Other banks should follow Wells Fargo’s lead and engage in broad relief to communities damaged by the foreclosure crisis,” continued Shanna Smith. “This is a huge step in the right direction and more is needed to get our neighborhoods, especially communities of color, back on their feet.”

The Fair Housing Act makes it illegal to discriminate based on race, color, national origin, religion, sex, disability or familial status, as well as the race or national origin of residents of a neighborhood.  This law applies to housing and housing-related activities, which include the maintenance, appraisal, listing, marketing and selling of homes.

Additional information, including complaint and conciliation agreement documents between Wells Fargo and the fair housing groups, and information about the Bank of America and U.S. Bank complaints, is available on the NFHA website: www.nationalfairhousing.org.

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The Greater New Orleans Fair Housing Action Center (GNOFHAC) is a private nonprofit organization. GNOFHAC is dedicated to eliminating housing discrimination and furthering equal housing opportunities through education, outreach, advocacy, and enforcement of fair housing laws across the metro New Orleans and Baton Rouge areas.

The activity described above was funded through a combination of private funding and HUD support. The author and publisher are solely responsible for the accuracy of the statements and interpretations contained in this publication. Such interpretations do not necessarily reflect the views of the Federal Government.

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