DeSaulnier and Cummings Request GAO Review of Practices Contributing to Property Neglect Impacting Communities of Color

Jul 25, 2018
Press Release

Washington, DC – Today, Congressman Mark DeSaulnier (CA-11) and Oversight and Government Reform Committee Ranking Member Elijah E. Cummings (MD-07) sent a letter to the Government Accountability Office (GAO) requesting a review of maintenance practices for foreclosed and real estate owned (REO) properties to identify any gaps which may contribute to property neglect in certain communities.  A decade after the housing and financial crisis of 2008, foreclosure still affects one in every 96 households, and another three million loans are likely to reach the foreclosure pipeline this year—leaving millions of houses potentially vulnerable to neglect.

“The need for such a study is further underscored by recent lawsuits and formal complaints that have charged mortgage-servicing institutions with racial discrimination through selective neglect of REO properties in neighborhoods of color,” the Members wrote.

Lawsuits against big banks, such as Deustche Bank, Wells Fargo, and most recently Bank of America, have highlighted that property neglect of foreclosed homes is disproportionately impacting communities of color.  In a study of 2,400 REO properties in 29 metro areas, the National Fair Housing Alliance (NFHA) found that 6 out of 10 Bank of America-owned properties in minority neighborhoods had trash or debris on the property, double the rate of those in traditionally white areas.  These findings are not isolated—similar levels of property neglect have been documented by other big banks. In February of 2018, the Northern California chapter of NFHA issued this report showing the stark difference between the upkeep of homes by Deustche Bank in the Bay Area, including homes in Richmond, Bay Point, El Sabronte, and Pittsburg.

“This neglect creates a serious problem for the surrounding neighborhoods, both for the risks to health and safety as well as for the drag on local economic development, including the diminished attractiveness of the neighborhoods to new residents and homebuyers,” the Members wrote.

DeSaulnier and Cummings requested that GAO address several issues in their review, including the level of spending on property maintenance during foreclosure and how it may vary by neighborhood. The Members are hoping GAO will identify the existing holes in the foreclosure process so they can work to identify policies to decrease its negative impacts.

The full text of the letter can be found here.

115th Congress