Study finds link between neglected foreclosed homes and race
Most people in Grand Rapids would probably tell you that race shouldn’t matter when it comes to banks and property management companies taking care of foreclosed homes.
But this time, the numbers just didn’t add up.
In a recently released national study called “Zip Code Inequality: Discrimination by Banks in the Maintenance of Homes in Neighborhoods of Color,” the numbers showed a “continuation of extremely troubling disparities in maintenance and marketing practices along racial lines,” finding on a national and local level that properties in predominantly Caucasian neighborhoods were cared for better than properties in predominantly African-American and Latino neighborhoods.
The study was done by the National Fair Housing Alliance, a Washington, D.C.-based consortium made up of nonprofit fair housing organizations and civil rights agencies from all over the nation.
“REO (real estate owned) homes in (Caucasian) neighborhoods were cared for in a far superior manner than those in African-American and Latino neighborhoods,” the study read.
“While REO properties in predominantly white neighborhoods were more likely to have neatly manicured lawns, securely locked doors, and attractive, professional ‘For Sale’ signs out front, REOs in communities of color were more likely to have overgrown yards, trash, unsecured doors, and broken or boarded windows. REO properties in communities of color were not maintained to the standards of nearby homes and generally appeared abandoned, blighted, and unappealing to potential homebuyers, even though they were located in stable neighborhoods in which neighboring homes were well maintained.”
The Grand Rapids area was one of about 30 housing markets investigated in the study. From April 1, 2012, to Dec. 31, 2013, a total of 116 REOs were investigated in the Grand Rapids area. The report included the following Grand Rapids findings:
- REOs in communities of color were 6.4 times more likely to have trespassing or warning signs displayed on the property versus REO homes in white communities.
- REOs in communities of color were 2.3 times more likely to have trash or debris on the premises compared to REO homes in white communities.
- REOs in communities of color were 1.7 times more likely to have a damaged fence than REOs in white communities.
“In the past few years, banks and the federal government have attempted through counseling, short sales, deeds-in-lieu and principal reduction to cut down on the number of foreclosures that complete the process and become bank-owned (also known as real estate owned or REO properties),” the study read.
“Despite these efforts, vacant REO properties still exist in record numbers in neighborhoods across the country, particularly in neighborhoods that had been targeted with predatory loans and in neighborhoods of color. Although foreclosure rates have fallen nationwide, recent estimates are that foreclosures still affect 1 in 96 households in the U.S. and that another 3 million troubled loans will likely reach the foreclosure pipeline by 2017.”
A copy of the full study is available here.