Philadelphia among 19 cities to receive REO settlement funds
6/30/2013 | Real Estate Blog
Without admitting any wrongdoing, Wells Fargo Bank N.A. has entered into a settlement agreement with the National Fair Housing Alliance. The NFHA filed the complaint against the lender in April 2012, alleging discrimination in the maintenance and marketing of real estate owned properties. Similar actions against U.S. Bank and Bank of America are still pending.
Real estate owned, or REO, properties are homes that banks acquire through repossession or foreclosure auctions. When real estate professionals talk about the housing recovery, they often cite the number of REO homes as one factor keeping home prices down. One of the reasons, as neighborhoods in Philadelphia will attest, is that banks often neglect their REO properties; the homes end up dilapidated eyesores that affect the values of every home in the area.
It turns out, though, that Wells Fargo neglected some properties and not others. In particular, they left properties in predominantly African-American and Latino neighborhoods to decay while they put time and money into properties in white neighborhoods.
Allegedly. Again, the lender admits no wrongdoing. The settlement, however, will distribute $27 million to organizations in 19 cities across the country to rehabilitate the homes. The funds will also be used for neighborhood stabilization programs, including programs that encourage people of color to become homeowners.
The parties have yet to hammer out the details of any of the programs, so it is not clear whether, for examples, homes beyond repair will be marketed for development. Zoning and land use changes may be beyond the scope of the settlement, but, again, it is too early to say.
Wells Fargo will make internal policy changes, as well. Among them, owner-occupants will have more time to make an offer on a home before the bank accepts offers from investors.
Source: Legal Newsline, “Wells Fargo agrees to pay $42M to settle complaint over foreclosed properties,” Jessica M. Karmasek, June 7, 2013