Fargo Bank agreed to pay $42 million to settle a complaint that it failed to
maintain foreclosed properties in minority neighborhoods, turning the vacant
houses into dilapidated eyesores.
National Fair Housing Alliance and member organizations sued Wells Fargo in
April 2012, alleging in an administrative complaint filed with the U.S.
Department of Housing and Urban Development that the bank violated the Fair
complaint alleged Wells Fargo’s so-called "real estate owned"
properties in white areas were much better maintained and marketed than the
properties in African-American and Latino neighborhoods. For example, houses
in minority areas often had ill-kept yards, broken doors, peeling paint or
neighborhoods across the country have been seriously damaged by the
foreclosure crisis, including the impact of [real estate owned] homes on
property values, curb appeal, and tax revenue for schools,” said Shanna
Smith, head of the National Fair Housing Alliance. “Our joint efforts will
help lay the foundation for the industry to get some of those neighborhoods
back on their feet.”
housing groups filed similar complaints against Bank of America and U.S.
Bancorp, which are still pending.
Fargo—represented by Skadden, Arps, Slate, Meagher & Flom partners Anand
Raman and Joseph Barloon, who are both based in Washington—is the first to
to the plaintiffs, who turned to Joseph Sellers and Peter Romer-Friedman of
Cohen Milstein Sellers & Toll, it’s the first-ever agreement regarding
the equal maintenance and marketing of bank-owned homes.
Fargo agreed to provide $27 million to the fair housing organizations to
promote home ownership, property rehabilitation and development in 19
communities of color, including areas of Baltimore, Washington D.C. and Prince
$3 million goes to the housing organizations to cover costs and attorney fees.
The bank will also pay HUD $11.5 million to support neighborhoods in an
additional 25 cities.