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Civil rights groups bring shocking housing discrimination lawsuit against Bank of America

Civil rights groups are coming together to bring a lawsuit against Bank of America and Safeguard Properties Management for alleged fair housing violations.

The National Fair Housing Alliance, a group of 19 fair housing organizations and two homeowners from Maryland filed a lawsuit Wednesday against the two companies. According to the lawsuit, the defendants intentionally failed to provide routine exterior maintenance and marketing for Bank of America-owned homes in African American and Latino neighborhoods across 37 metro areas.

This was then compared with mostly white neighborhoods, where the bank allegedly consistently maintained its homes.

The claims the civil rights groups make about some of these homes is nothing short of shocking. The groups say they found evidence of wildly overgrown grass and weeds, unsecured doors and windows, damaged steps and handrails, accumulated trash and debris, unsecured pools, graffiti and even dead animals decaying in the yards.

housing discrimination

By contrast, the lawsuit alleges that in predominantly white working- and middle-class neighborhoods, homes are far more likely to have the lawns mowed and edged regularly, invasive weeds and vines removed, windows and doors secured or repaired, debris and trash removed, leaves raked and graffiti erased from the property.

Bank of America took possession of these homes after it foreclosed on the properties and became the owner of record. As owner of these homes, the bank is responsible for routine exterior maintenance on all of its properties.

NFHA claims it first made Bank of America aware of these problems back in 2009, and even offered recommendations for improvement. However, no such improvements were made, according to the alliance.

“Bank of America should have taken meaningful steps toward fixing these problems after being put on notice, but failed to do so,” said Caroline Peattie, executive director of Fair Housing Advocates of Northern California, one of the fair housing groups filing the lawsuit. “For example, Bank of America boarded windows in communities of color rather than installing clear boarding or fixing the windows.”housing discrimination

“Boarded windows carry a stigma and imply the neighborhood is not safe or desirable,” Peattie said. “Bank of America must be held accountable for failing to maintain its foreclosure inventory. In California, Bank of America has played a major part in changing single-family, owner-occupied neighborhoods into rental communities, as large investors buy bank-owned homes in quantity and drag property values down in the process.”

Two homeowners from Maryland joined the federal discrimination lawsuit and revealed their experiences living next to these Bank of America-owned homes. The homeowners, Wanda Onafuwa and Chevelle Bushnell, described scenes such as rat infestations, devaluation of their properties due to the appearance of the next-door housing discriminationhomes and even squatters over the course of several months.

Onafuwa has owned her home in Baltimore for 23 years while Bushnell has owned her home in District Heights for 28 years, and both claim they never had these problems before Bank of America and Safeguard allegedly failed to secure and maintain the properties.

“Bank of America and Safeguard’s deplorable and intentional inaction left innocent homeowners exposed to numerous health hazards and personal risks,” NFHA President and CEO Lisa Rice said. “No one should have to live like this due to Bank of America’s failure to maintain its own properties.”

“NFHA and the co-plaintiffs filed this lawsuit to make sure that these discriminatory practices come to an end and that perpetrators like Bank of America are held responsible for their unjust policies and practices,” Rice said.housing discrimination

An investigation conducted by NFHA on 1,600 homes showed that 45% of the bank’s properties in communities of color had 10 or more maintenance or marketing deficiencies, compared with just 11% of the bank’s homes in predominantly white neighborhoods.

About 64% of the bank’s homes in communities of color had trash or debris visible on the property, compared with 31% in predominantly white neighborhoods. About 37% of homes in color communities had unsecure or broken doors compared with just 16% in white neighborhoods. Finally, 49.6% of properties had damaged, boarded or housing discriminationunsecured windows in color communities, compared with 23.5% under the same conditions in white neighborhoods.

“Bank of America and Safeguard’s intentional failure to correct their discriminatory treatment in African American and Latino neighborhoods — the same communities hardest hit by the foreclosure crisis — is systemic racism,” Rice said. “The purposeful neglect of bank-owned homes in communities of color devalues the properties and the lives of the families in the neighborhoods around them.”

“The health and safety hazards created by these blighted bank-owned homes negatively affect the residents, especially the children, living nearby,” she said. “We have asked Bank of America and Safeguard to provide the same standard of routine exterior maintenance and marketing for all of its bank-owned homes, regardless of the age, value or racial composition of the neighborhood in which they are located.”

Here’s what Safeguard had to say about the accusations:

Safeguard has yet to be served with the complaint. Safeguard neither condones nor tolerates acts of discrimination or business practices that would unfairly target or neglect certain neighborhoods based on location and demographics. Safeguard remains disappointed by the National Fair Housing Alliance’s continued attack on Safeguard with ill-conceived and disingenuous allegations of an extremely serious nature, and we will again vigorously defend against any and all of NFHA’s allegations. Safeguard has a proven track record of working with our clients, communities, and civic leaders throughout the country to combat blight brought on by the housing crisis. We host national conventions with the primary purpose of collecting and reinforcing the behavior and guidelines that prevent neighborhood deterioration, and we participate in industry and investor feedback panels where the focus is to build best practices to protect and preserve the houses that make up these communities. Our primary focus is to protect our clients’ assets from decay, perform services in a consistent, transparent and high-quality manner, and ensure that the communities we serve are protected.

And Bank of America claimed previous reports from NFHA held flaws in their methodology including faulting the bank for properties other entities were responsible for maintaining, or declining to consider properties under repair.

“The allegations are without merit,” the bank told HousingWire. “We apply uniform practices to the management and marketing of vacant bank-owned properties across the U.S., regardless of their location.”

“Bank of America is committed to ensuring bank-owned properties are maintained in a quality manner, and to supporting the stabilization and revitalization of our neighborhoods,” the statement continued. “We monitor and review our vendors’ practices and procedures to ensure they are aligned with the bank’s policies.”

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Joe Cartellone joins BBVA Compass as director of mortgage banking and home equity

BBVA Compass appointed Joe Cartellone as its director of mortgage banking and home equity.

“His innovative mindset, coupled with his proven success in building and growing high-performance mortgage strategies, will be a strong addition to the bank and our valued clients. He is committed to not only the bank’s success, but also our clients’ success in buying their own homes,” BBVA Compass Head of Retail Banking Çagrı Süzer said in a statement.

BBVA Compass Director Joe Cartellone

In his new role, Cartellone will head BBVA Compass’ mortgage and home equity business across the U.S., including mortgage and home equity originations, servicing, secondary marketing and portfolio management.

Cartellone has been in the industry for more than 20 years, and prior to joining BBVA he served as the head of SMB Direct Merchant Services at First Data Corporation and as the mortgage banking retail channel executive for JPMorgan Chase. He was also on TeleCheck Services board, on the Financial Services Roundtable Executive Housing Policy Council, in the Mortgage Bankers Association of America and the National Association of Realtors.

“BBVA Compass is excited to welcome an experienced and ambitious banking professional in Joe Cartellone to our team,” Süzer said.

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FHFA: Home prices rise slowly

Home prices increased slightly in April, rising only 1% from March, according to the latest monthly House Price Index from the Federal Housing Finance Agency.

The FHFA monthly HPI is calculated using home sales price information from mortgages sold to, or guaranteed by, Fannie Mae and Freddie Mac. Because of this, the selection excludes high-end homes bought with jumbo loans or cash sales.

Capital Economics says this the second consecutive month of small monthly gains, and although inventory levels have remained at record lows, house price growth is being contained by subdued active housing demand. As interest rates continue to rise and mortgage lending stays tight, there will be a continual slowdown in annual price growth.

Monthly, across the nine census divisions, home price changes from March to April 2018 ranged from – 0.5% in the West South Central division to an increase of 0.6% in the East North Central division. Changes were all positive year over year, ranging from 4.6% in the West South Central division to 8.9% in the Mountain division.

The chart below compares 12-month price changes to the prior year:

FHA: June 21

(Source: FHFA)

Here are the states in each of the divisions:

West South Central: Oklahoma, Arkansas, Texas, Louisiana

East North Central: Michigan, Wisconsin, Illinois, Indiana, Ohio

Mountain: Montana, Idaho, Wyoming, Nevada, Utah, Colorado, Arizona, New Mexico

According to Capital Economics, low inventory will support prices for the rest of 2018. But the company says a sellers’ market will prevent rapid price growth, and it expects house prices to end 2018 around 5%.

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Realogy appoints Katrina Helmkam as Cartus CEO

Realogy Holdings Corp. recently announced the appointment of Katrina Helmkamp as chief executive officer of Cartus Corporation. Helmkamp will report directly to Realogy Chief Executive Officer and President Ryan Schneider.

“Katrina Helmkamp is an experienced CEO who has built her career leading companies through transformations,” Schneider said. “She has led global teams, knows how to build and launch new products, and understands the evolving technology and data landscape.”

Helmkamp has more than 27 years of leadership experience in business strategy, operations, product development, technology and innovation across multiple sector. Helmkamp is also a member of the board of directors for publicly traded IDEX Corporation.Katrina Helmkamp

Helmkamp will be responsible for improving Cartus’ performance, while leading  technology and process transformation, according to Schneider.

Prior to Realogy, she was the CEO of Lenox Corporation, CEO of SVP Worldwide, senior vice president at Whirlpool Corporation, served as president of Terminix and was a partner for six years at The Boston Consulting Group.

“I am excited to join Realogy as CEO of Cartus. I look forward to helping the Company fully leverage its technology and data scale, and to lead a technology and process transformation that will better support Cartus’ client and customer expectations for speed, digital delivery and efficiency,” Helmkamp said.It’s a tremendous opportunity to work with the Cartus team, and with Ryan Schneider and the Realogy leadership team, as we focus on driving business results.”

Looking for the next great opportunity? Visit HousingJobs, the most comprehensive mortgage finance jobs database — powered by your friends at HousingWire.

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How much are government regulations costing multifamily developers? Hint: A lot

Despite the Trump administration’s ongoing regulatory rollback, government regulations still make up more than 30% of the cost of multifamily building, according to a newly released study from the National Association of Home Builders and the National Multifamily Housing Council.

According to the report, 90% of multifamily developers incur costs from delays caused by long approval processes, stringent construction requirements, building code changes and OSHA requirements.

These costs come from various governmental sources and range from zoning requests and affordable housing requirements to community fees such as utility hook up and impact fees.

The report breaks down costs by type, rate of occurrence and average cost in the chart below.

Incidence and typical magnitude of regulatory costs

(Click to enlarge. Courtesy of NAHB and NHMC)

According to the report, building code changes over the last decade are the biggest inflator of prices. These costs represent 7.2% of the cost in 98% of developments.

The second highest cost is out of the ordinary development requirements, representing 6.3% of the budget for 95% of projects. The bulk of these costs come from energy-efficiency requirements. The NMHC and NAHB point to manufacturers pushing for additional regulations that would benefit their product lines as one of the reasons they resist some of the proposed changes to the International Energy Conservation Code.

NAHB representatives have criticized federal agencies for supporting certain code changes that removed flexibility and limited builders’ options, saying that they are driving up costs without improving energy efficiency to the benefit of certain product manufacturers.

The total cost of regulations on multifamily developments comes out an average of 32.1%, with the low end of the spectrum of regulatory expenses representing 21.7% of costs and the high end representing 42.6% of the costs (see chart below).

Government regulation as a share of multifamily development costs

(Click to enlarge. Courtesy of NAHB and NHMC)

Though not against regulation on the whole, NAHB and NHMC feel that the heavy regulatory costs are exacerbating the affordability issue and advocate an assessment of what is necessary to regulate and what is not.

From the report:

When the cost of multifamily development rises, it unavoidably translates to higher rents and reduced affordability of rental housing. Multifamily developers can not secure financing to build their projects unless they can demonstrate to lenders that the rents will be sufficient to cover costs and pay off the loans. The purpose of this article is not to argue that all regulation is bad and should be eliminated, but to raise awareness of how much regulation currently exists, how much it costs, and to encourage governments to do a thorough job of considering the implications for housing affordability when proposing and implementing new directives. 

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Bob Hope’s California estate sells for $15 million

Comedian legend Bob Hope’s iconic estate has been sold by Craig Strong, executive director of the estates division at Pacific Union International.

Bob and Dolores Hope Estate located in Toluca Lake, California sold for $15 million. Although there were higher offers from developers, it was important to both Strong and Hope’s family that the ultimate buyer wished to preserve the residence, limiting any future development on the rest of the property.

Bob and Hope Dolores

(Courtesy of Strong Realtor)

“As a resident of Toluca Lake, along with my wife Tara and our two children, I have become a strong advocate for the area, which just so happens to be one of the most coveted neighborhoods in all of Los Angeles,” Strong said. “This, with the opportunity to be involved in a historic sale and work with a buyer whose intention is to preserve the main residence and minimize the impact of any further development, is a win-win for the local community.”

The 15,000-square-foot English traditional-style residence was originally built in 1939 by architect Richard Finkelhor. The home includes an outdoor swimming pool, golf course, an array of outdoor spaces on both levels, a formal rose garden, a large guest house and many other luxurious facets.

As requested by Dolores Hope’s will, all proceeds from the sale will go directly to Bob and Dolores Hope’s Foundation.

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CoreLogic: Home equity gains top $1 trillion in first quarter

Homeowner equity topped $1 trillion in the first quarter of 2018, according to the Q1 2018 home equity analysis from CoreLogic, a property information, analytics and data-enabled solutions provider.

Homeowners with a mortgage, about 63% of all homeowners, saw equity increase by 13.3%, a total of $1.01 trillion, since the first quarter last year. The average homeowner gained about $16,300 in equity over the last year.

The total number of mortgaged residential properties with negative equity decreased 3% from the fourth quarter to 2.5 million homes, or 4.7% of all mortgaged properties. This is a drop of 21% from 3.1 million homes in the first quarter last year.

Home-price growth has accelerated in recent months, helping to build home-equity wealth and lift underwater homeowners back into positive equity the primary driver of home equity wealth creation,” CoreLogic Chief Economist Frank Nothaft said. “The CoreLogic Home Price Index grew 6.7% during the year ending March 2018, the largest 12-month increase in four years.

This chart shows which states saw the largest equity gains from last year.

Core-Logic equity report 08/18

(Source: CoreLogic)

The average growth in home equity was more than $15,000 during 2017, which is the most in four years. Washington led all states with 12.8% appreciation, and homeowners had larger home equity gains than the national average, according to Nothaft.

The value of negative equity in the U.S. at the end of the first quarter totaled about $284.8 billion. This is up $100 million from $284.7 billion in the fourth quarter.

“Home equity balances continue to grow across the nation,” CoreLogic President and CEO Frank Martell said. “In the far Western states, equity gains are fueled by a long run in home price escalation. With strong economic growth and higher purchase demand, we expect these trends to continue for the foreseeable future.”

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Midland, Texas is the hottest housing market in U.S.

Midland, Texas is the hottest housing market in the nation for the second month in a row, according to data from, knocking California heavyweights like Los Angeles and San Francisco from their traditional perches atop the thermometer.

It looks like California finally overheated, registering only four markets in the top 20 as opposed to two months ago when more than half of the list was located in the Golden State.

“The California housing market has been hot for a long time – but maybe too hot. Our May hotness index further confirms we’re seeing that as prices in California continue to soar, people are increasingly looking elsewhere,” Director of Economic Research Javier Vivas said in the report.

“As we continue into what we expect to be the hottest home-buying season in history, look for a wide variety of locales to remain red-hot,” he added.

The report also indicates spillover demand in more affordable metros. Seven Midwest metros made it in the top 20, which is the highest number since started taking temperatures (see full list below).

May 2018 hotness ratings

(Courtesy of compiled this list by analyzing housing market supply and demand using listing views as an indicator of demand and median days on market as an indicator of supply.

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Fitch: Multifamily REOs on the rise in CMBS 2.0 deals

CMBS 2.0 defaults are on the rise, with multifamily REOs making up 30% of that increase.

According to a report from Fitch Research, though the volume of CMBS 2.0 defaults is low, the yearly increase remains significant, and of that increase, multifamily and hospitality properties in North Dakota and Texas, harried by the energy downturn, made up the majority of the defaults.

Graph of Growing Volume of REO in CMBS 2.0 Transactions

“These loans defaulted due to the decline in the oil and gas industries, with the top two geographic concentrations in North Dakota (28%) and Texas (26%). These two properties types have been hard hit by dried up demand for housing and lodging, especially in the tertiary markets surrounding the Bakken and Eagle Ford shales,” the report states.

Chart of REO Property Type Distribution

Fitch predicts that this trend of increasing defaults on CMBS 2.0s will continue. From year-end 2016 to year-end 2017, the volume of CMBS 2.0 defaults increased by $221 million, from $82 million to $303 million.

That represents a 269% increase in the volume of CMBS 2.0 defaults.

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CoreLogic: Home values increase in all 50 states

Home prices showed yet another surge in April as year over year values increased for all  50 states, according to the latest Home Price Index report from CoreLogica global property information, analytics and data-enabled solutions provider.

Home prices increased 6.9% nationally from April 2017 to April 2018, and increased 1.2% from the prior month, according to the report.

The chart below shows home prices have been steadily increasing at the same rate for the past several years. 

CoreLogic- April Home Prices

(Source: CoreLogic)

“The best antidote for rising home prices is additional supply,” CoreLogic Chief Economist Frank Nothaft said. “New construction has failed to keep up with and meet new housing growth or replace existing inventory. More construction of for-sale and rental housing will alleviate housing cost pressures.” 

An analysis of home values in the country’s 100 largest metropolitan areas based on housing stock, indicates 40% of metropolitan areas had an overvalued housing market as of April 2018, CoreLogic reported.

Another 28% of the top 100 metropolitan areas were undervalued while 32% were at value. When looking at only the top 50 markets, 52% were overvalued, 14% were undervalued and 34% were at-value.

The national home-price index is projected to increase by 5.3% from April 2018 to April 2019, according to the CoreLogic HPI Forecast.

The forecast is an econometric model that projects calculations from analyzing state level forecast, which are measured by the number of owner-occupied households for each state.

 As of April, Florida’s recovery is promising, but experts say another natural disaster could hinder its growth.

“Florida continues to show price resiliency after Hurricane Irma in 2017. Despite the impact of the hurricane, prices were up 5.8% across the state compared to a year ago,” CoreLogic President and CEO Frank Martell said. “CoreLogic data projects continued gains to home prices in Florida for the remainder of 2018. However, gains could be erased if a significant storm makes landfall again.”