When Deutsche Bank forecloses on a house in a predominantly minority neighborhood, it doesn’t bother maintaining the property in the same way that it does with foreclosures in white neighborhoods, according to a federal complaint filed Tuesday by the National Fair Housing Alliance (NFHA).
The group looked at Deutsche Bank-owned properties in the Washington, D.C., Memphis, and Chicago metropolitan areas and found vast differences in upkeep between mostly white and mostly non-white neighborhoods. Half of the bank’s properties in white neighborhoods in the D.C. area had less than five “maintenance or marketing deficiencies” — a blanket term for the dozens of different neglect factors the group’s investigators looked for, such as broken windows, mold, or squatters — while 91 percent of the bank’s homes in black and latino neighborhoods in the area had five or more. The same disparity was even more pronounced in Memphis, where 94 percent of the bank’s properties in communities of color had five or more problems compared to only 40 percent of white community properties. The gap was smaller in Chicago, but still significant, according to the complaint.
Deutsche Bank settled similar allegations of discriminatory business practices in Los Angeles by paying the city $10 million last summer, an NFHA press release notes. Shanna Smith, the group’s president and CEO, says that experience “should have inspired Deutsche to change its business model and increase quality control measures,” but what their investigators found “clearly demonstrates the opposite.”
Banks are legally obligated to perform regular upkeep on foreclosed houses in order to protect property values for neighboring homeowners, but it is routine for the country’s large banks to neglect that responsibility in black and latino neighborhoods. The complaint against Deutsche Bank is the fourth NFHA has filed in the past few years, and the evidence the group gives in the complaint is very similar to that in previous filings against Bank of America, U.S. Bancorp, and Wells Fargo. Wells Fargo decided last spring to pay $42 million to settle those allegations, but the other complaints are still pending. The Department of Housing and Urban Development declined to comment on the complaints, according to Reuters, but a Deutsche Bank spokeswoman defended the company by saying that day-to-day management of the properties in question is the responsibility of mortgage servicing companies over which the bank has no control.
Regardless of who is legally liable for the practices uncovered by the NFHA investigation, the housing finance and mortgage servicing industry as a whole continues to engage in discriminatory practices. The obvious, vocal, and legislated discrimination that used to be common in housing has been replaced by a sneakier, quieter form of unequal treatment. Discrimination hasn’t gone away, but it has gone underground.