BofA Sued by Fair Housing Group Over Minority Neighborhood Decay

Bank of America Corp., the second- largest U.S. lender, engages in a “systemic practice” of failing to maintain foreclosed properties in minority neighborhoods, according to a nonprofit group’s complaint.

The National Fair Housing Alliance’s complaint, filed today with the U.S. Department of Housing and Urban Development, said that properties owned by the Charlotte, North Carolina-based bank in eight cities were allowed to accumulate trash, had broken windows and other forms of vandalism, and lacked signage that could invite purchase offers.

“Our investigation shows that Bank of America continues to disregard its real-estate-owned homes in communities of color,” Shanna Smith, president of the National Fair Housing Alliance in Washington, said in a statement. “Bank of America has been on notice of its failure to maintain REOs since the summer of 2009, yet has made no improvement in addressing racial disparities in the maintenance and marketing” of the homes.

Bank of America joins U.S. Bancorp in being targeted by suits from the HUD-funded nonprofit over claims it neglects bank-owned homes in minority communities. The Obama administration has boosted scrutiny of banks to discourage loan discrimination after the housing bust led to record defaults.

“We strongly deny their allegations and stand behind our property maintenance and marketing practices,” Dan Frahm, a Bank of America spokesman, said in an e-mail. “Bank of America is committed to stabilizing and revitalizing communities that have been impacted by the economic downturn, foreclosures and property abandonment.”

Derrick L. Plummer, a HUD spokesman, didn’t immediately respond to a phone call seeking comment.

-- Editors: Steven Crabill, Peter Eichenbaum

To contact the reporter on this story: Hugh Son in New York at hson1@bloomberg.net

To contact the editors responsible for this story: David Scheer at dscheer@bloomberg.net; Rick Green at rgreen18@bloomberg.net

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