Suit claims blight caused by neglected foreclosed properties is “deepening the racial wealth gap and inequality in America.”

The National Fair Housing Alliance, a nationwide consortium of nonprofit civil rights organizations, has filed suit against Deutsche Bank and its servicer and property management company, claiming the German banking and financial behemoth routinely neglected upkeep on foreclosed homes in Latino and black communities over nearly a decade.

Filed in conjunction with 19 other fair housing groups in federal district court in Chicago, the suit alleges Deutsche routinely failed over eight years to maintain lawns, remove debris and repair roofs and broken windows at bank-owned homes in middle- and working-class neighborhoods in 30 metropolitan areas. It also claims that Deutsche-owned homes in predominately white neighborhoods, meanwhile, were routinely maintained through property management company Altisource and servicer Ocwen Financial Corp., both of which were also named in the lawsuit, filed Feb. 1, the beginning of Black History Month. 

Deutsche bank-owned home in Maywood, IL. Source: National Fair Housing Alliance

As a provider of residential and commercial mortgage loan servicing, Ocwen, a West Palm Beach, Florida-based company, is responsible for overseeing real estate payments, long-term escrows and other financial records for the Deutsche properties. Altisource, a spin-off Ocwen, is responsible for maintenance on foreclosures, and Deutsche is the trustee of the properties.

“The poor appearance of Deutsche bank-owned homes in middle- and working-class neighborhoods of color destroys the homes’ curb appeal for prospective homebuyers and invites vandalism because the homes appear to be abandoned,” states the suit. “Additionally, the blight created by Deutsche Bank/Ocwen/Altisource results in a decline in home values for African American and Latino families who live next door or nearby, deepening the racial wealth gap and inequality in America.”

The investigation by National Fair Housing Alliance workers and 19 other regional housing groups began in 2010, with investigators regularly returning to homes in Minneapolis, Chicago, Miami and Baton Rouge, among dozen of other cities nationwide. In all, the workers collected 30,000 photos of Deutsche Bank-owned homes to document the differences in upkeep between black and Latino communities and white neighborhoods.

Deutsche bank-owned home in Baltimore, MD. Source: National Fair Housing Alliance

Initially, a series of complaints were filed with the Department of Housing and Urban Development, but when no repairs were made at any of the homes, the group filed the suit.

According a press release, the HUD complaint was filed and then amended to add additional cities and new evidence on February 26, 2014; April 30, 2014; August 7, 2014; January 22, 2015; August 5, 2016; February 14, 2017; and July 26, 2017.

“We chose to first file administrative complaints with HUD against Deutsche Bank, expecting the bank to review our evidence and implement changes to secure, maintain, and market its bank-owned homes in communities of color to the same standard it did in white neighborhoods,” said Shanna Smith, president and CEO of the organization, in a statement. “However, even after meeting with Deutsche Bank’s legal counsel in April 2015 and sharing photographs illustrating the significant differences in treatment between homes in African American/Latino and white neighborhoods, we saw no improvement.”

A spokesperson for Altisource denied the allegations, saying HUD dismissed the claims in 2016.

“The assertions made by the National Fair Housing Alliance have no merit,” the spokesperson, Lisen Syp, told Inman News. “The NFHA research, relied on as the basis of its claims, was previously discredited in 2016 by the U.S. Department of Housing and Urban Development in connection with another claim against a large U.S. bank. Altisource is a property preservation vendor operating on behalf of institutions that service mortgages and foreclosed homes. The NFHA assertions misrepresent both Altisource’s conduct and our role as a property preservation vendor.”

Deutsche declined to comment, and Ocwen did not immediately respond to a request for comment.

Email Jotham Sederstrom

Show Comments Hide Comments

Comments

Sign up for Inman’s Morning Headlines
What you need to know to start your day with all the latest industry developments
Success!
Thank you for subscribing to Morning Headlines.
Back to top
We're here to help. Free 90-day trial for new subscribers.Click Here ×