Financial services companies unsuccessful in blocking fair housing lawsuit

A lawsuit alleging financial services companies discriminated against minority neighborhoods in 30 cities across the country, including Gary and Indianapolis, has been allowed to move forward in federal court.

The complaint, filed against Deutsche Bank National Trust companies, Ocwen Loan Servicing LLC and Altisource Solutions Inc., asserts the financial services companies failed to maintain foreclosure homes in black and Latino neighborhoods. Plaintiffs in the lawsuit are the National Fair Housing Alliance and more than a dozen other fair housing organizations, including Fair Housing Center of Central Indiana.

Based on collected data, the plaintiffs allege the bank-owned homes in communities of color were much more likely to be in disrepair than the homes in predominantly white neighborhoods. Foreclosed houses in the minority neighborhoods were found, by the plaintiffs, more likely to have overgrown or dead shrubbery, overgrown lawns, broken mailboxes, damaged steps, holes in the homes, and broken windows. Conversely, foreclosed houses in primarily white working- and middle-class neighborhoods were more likely to have the lawns mowed, weeds and vines removed, leaves rakes, trash removed, and doors and windows secured or repaired.

In an order in National Fair Housing Alliance, et al. v. Deutsche Bank National Trust, as trustee; Deutsche Bank Trust Company Americas, as trustee; Ocwen Loan Servicing, LLC; and Altisource Solutions, Inc., 1:18-cv-00839, issued Nov. 13, the U.S. District Court for the Northern District of Illinois, Eastern Division, denied in part the defendants’ motion to dismiss. The court found “there is a ‘clear, direct and immediate’ path between Defendants’ alleged discriminatory lack of maintenance and Plaintiffs response to that lack of maintenance through investigations, reporting, and advocacy.”

The plaintiffs originally filed the lawsuit in February 2018. After the defendants successfully moved to have the case dismissed, the plaintiffs filed again in May 2019.

In the second amended complaint, the plaintiffs again allege the financial services companies’ maintenance on the exteriors of the foreclosed properties constitutes unlawful racial discrimination, in the form of both disparate impact and discriminatory treatment, under the Fair Housing Act.

Following the court order, plaintiffs hailed the outcome.

“This is an important victory for the residents of Black and Latino neighborhoods in cities across the country,” Lisa Rice, president and CEO of the National Fair Housing Alliance, said in a statement. “The investigation we conducted clearly shows that Deutsche Bank Trust companies and other financial giants have policies that result in disparate outcomes based on the racial composition of the neighborhood. It also demonstrates a pattern of intentional discrimination because of the willful neglect of bank-owned houses in communities of color.”