Bank of America settles alleged disability discrimination violations

A civil complaint and proposed settlement agreement were filed on Friday by the Department of Justice and the U.S. Attorney’s Office for the Eastern District of New York to resolve claims that Bank of America, N.A. participated in discrimination on the basis of disability.

Beginning in January 2010 and in violation of the Fair Housing Act, the DOJ alleges that the bank maintained a policy of denying mortgages and home equity loans to adults with disabilities who were under legal guardianship or conservatorships.

“Bank of America asserts that it did not unlawfully discriminate against any person based on a disability or otherwise, and asserts that the allegations in the Complaint concern previous underwriting guidelines, which it has since voluntarily changed, that were implemented by the Bank after the financial crisis of 2009-2010 for the purpose of protecting at-risk applicants from financial exploitation,” a Bank of America representative said.  

Prior to the investigation, the bank changed its policy in 2016 for mortgage loans and in 2017 for home equity loans – the current terms of the settlement require the bank to continue to maintain its “non-discriminatory loan underwriting policies and train its employees on the new policies.”

“No one in this free country should be denied access to the American Dream merely because of a disability. The unalienable right to pursue happiness extends to all people, including those with disabilities, and purchasing a home is one way many people exercise this right,” said Eric Dreiband, assistant attorney general of the Civil Rights Division.

The settlement will also require the bank to pay $4,000 per loan to eligible loan applicants who were affected by its prior discriminatory policies and monitor all loan processing and underwriting activities to ensure compliance with the Fair Housing Act.

According to Bank of America, the settlement impacts roughly 75 prior applicants and the DOJ anticipates that the payments will total approximately $300,000. 

“The Fair Housing Act prohibits banks from denying mortgage loans and other housing-related credit to people because of their disabilities, and this department will hold accountable those lenders who engage in such illegal conduct,” Dreiband said.

A Bank of America representative responded to the settlement and claims on behalf of the bank with:

  •  Bank of America has an outstanding record of supporting clients and employees with disabilities, including being recognized with a  top score in the Disability Equality Index for four years.
  • Due to concerns about possible exploitation, the bank for a period of time limited mortgage loans for people with guardians.
  • We updated our policies more than three years ago to expand access to such loans.
  • Our Disability Advisory Council works to consistently improve and further develop our strategy to serve employees, clients and communities.

According to the American Institutes for Research, there are 64 million people in the U.S. living with a disability, and under the Fair Housing Act, people with disabilities may request reasonable accommodations and modifications in buying or renting a home, taking out a mortgage, seeking housing assistance or engaging in other housing-related transactions.

This most recent settlement does not mark the first time Bank of America allegedly violated the Fair Housing Act. In 2018, a suit filed by the National Fair Housing Alliance accused Bank of America and Safeguard Properties Management of “intentionally failing to provide routine exterior maintenance and marketing for Bank of America-owned homes in African American and Latino neighborhoods across 37 metro areas, while consistently maintaining similar bank-owned properties in white neighborhoods.”

In 2019, the companies moved to dismiss the case, however, a federal judge denied the motion, stating that the plaintiffs had sufficiently alleged disparate impact.

Recently, amendments to the Fair Housing Act have come under scrutiny after the Department of Housing and Urban Development proposed changes on the interpretation of the disparate impact standard – which would make it more difficult to prove housing discrimination.

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Pelosi calls out Trump’s repeal of Obama’s fair housing rule

House Speaker Nancy Pelosi issued a scathing critique of the Trump administration’s decision to overturn an Obama-era fair-housing rule, noting it comes at a time when the nation is having a reckoning on racial issues.

“The Trump Administration’s elimination of the fair housing rule is a betrayal of our nation’s founding values of equality and opportunity for all,” Pelosi said. “It is a shameful abdication of our government’s responsibility to end discriminatory housing practices and to lift up our nation’s most vulnerable communities.”

On Thursday morning, Housing and Urban Development Ben Carson announced that, at President Donald Trump’s direction, he was overturning a 2015 rule requiring cities and towns that receive federal funding to examine local housing patterns for racial bias and address any measurable bias.

The five-year-old rule governed the implementation of the Affirmatively Furthering Fair Housing, or AFFH, provision of the 1968 Fair Housing Act passed by Congress and signed into law by President Lyndon B. Johnson.

While HUD can’t overturn the AFFH provision of the Fair Housing Act by tweet, or by other means short of having a new law passed, it’s changing a HUD rule about how the law will be implemented.

“Today, we are tearing down the Obama Administration’s Affirmatively Furthering Fair Housing rule, which was an overreach of unelected Washington bureaucrats into local communities,” Carson said on Twitter.

HUD later said its rule will be replaced with a new rule called Preserving Community and Neighborhood Choice, which it says defines fair housing broadly to mean housing that, among other attributes, “is affordable, safe, decent, free of unlawful discrimination, and accessible under civil rights laws.”

The new rule gives people wider latitude, including the ability to self-certify.

“With the new rule, a grantee’s certification that it has affirmatively furthered fair housing would be deemed sufficient if it proposes to take any action above what is required by statute related to promoting any of the attributes of fair housing,” HUD said in a statement.

The efforts to change the AFFH rule began in January 2018 when HUD announced that it was delaying the deadline for local governments to submit their fair housing evaluations.

HUD efforts to change the AFFH rule were challenged in court by fair housing advocates, including the National Fair Housing Alliance, Texas Appleseed, and Texas Low Income Housing Information Service, which asked a judge to require HUD to enforce the AFFH rule as originally established.

But the judge overseeing the case eventually threw out the housing groups’ case, stating that they did not prove that they were harmed by HUD’s actions.

“Today, more than 50 years after the Fair Housing Act was enacted into law, we are still fighting to protect these critical civil rights and to eliminate once and for all our country’s legacies of redlining and racial segregation,” Pelosi said on Thursday.

In October 1973, five years after the Fair Housing Act was signed into law, the Department of Justice sued Trump and his father, Fred Trump, as well as their company, Trump Management, for violating Fair Housing provisions as they managed their apartments in the New York neighborhoods of Queens and Brooklyn.

Undercover federal investigators posing as rental applicants were told there were no vacancies if they were Black but were offered a choice of several apartments if they were white, the lawsuit said. Federal investigators also had evidence showing applications made by Black people were marked with codes such as “C” for “colored.”

The Trumps ultimately settled the suit without admission of guilt.

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Here are HousingWire’s 2020 Women of Influence

2020 Women of Influence

The 2020 Women of Influence winners represent 100 of the most influential women in leadership in the housing industry. From tech advancements to mentoring to their engagement in nonprofits, these women are showing true leadership inside and out of the housing industry. They are using their positions to bring others along their path and propel the next generation of women into leadership. 

During this time especially, many women spearheaded efforts to move employees to remote offices, provide help to the community around them and even set up training to help their teams as more digital workflows were implemented. Women rose through the challenges to provide leadership and influence the world around them. 

HW+ members get a sneak peak of the 2020 Women of Influence winners, which will be announced with their full profiles on August 3.

This sneak peak of the winners is for HW+ members. Join today with an HW+ Membership! Already a member? log in

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News of $1.1 billion Tesla factory revs up already hot Austin housing market

Tesla

Electric car giant Tesla unveiled plans this week to build a $1.1 billion factory in Austin. Rumors had swirled for months prior that it might be happening, but this week, the news became official.

In building the factory on some 2,100 acres, Tesla has said it could hire 5,000 people over time.

The news follows 2018 and 2019 announcements by tech giants Apple and Google that they too plan to hire thousands of people in the Austin area in coming years. 

While the jobs created by Tesla will definitely only fuel the city’s economic boom (Austin has ranked on numerous lists in recent times, including coming in at No. 3 on the Milken Institute’s Best-Performing Cities 2020 report), they will come at a lower salary than those created by the likes of Apple and Google. According to the Austin Business Journal, the factory could employ about 5,000 workers with an average annual salary of $47,147 and a median salary of $68,303.

The rest of this content is for HW+ members. Join today with an HW+ Membership! Already a member? log in

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One year later: where is Google on its affordable housing plans?

On Thursday, Google marked the one-year anniversary of its Bay Area housing commitment with an update on its progress.

So far, Google said that its Housing Trust has invested these funds in six projects throughout the Bay Area, and plans to break ground on more developments in 2021.

Last year, Google announced a $50 million investment in Housing Trust Silicon Valley‘s TECH Fund. Another $50 million has now been committed to Housing Trust Silicon Valley to establish the Launch Initiative, funded 90% by Google, with a goal of investing in more affordable housing projects.

Housing Trust Silicon Valley launched the TECH (Tech + Equity + Community + Housing) Fund in March 2017, with the goal of providing flexible financing to affordable housing developers so they can compete for sites on the open market.

Part of the $50 million pledge is supporting more than 33,000 people with services such as food distribution, job training, case management and housing 9,000 people over the span of four years, Google said.

Google said it has been working with modular housing companies, like Factory_OS, with a goal of creating tens of thousands of affordable housing units over the next decade, including around 700 multi-family modular homes in Oakland and San Francisco by early 2021.

According to Google, it has allocated a total of $115 million from its $250 million investment fund to help create around 24,000 new affordable housing units by 2029. Google.org has also granted $7.75 million to nonprofits on the front lines of homelessness.

Over the last year, Google has provided capital to affordable housing projects, like the Kelsey Ayer Station, from its $250 million investment fund. This San Jose-based project will offer 115 homes for those with a range of incomes while 25% of the community is specifically reserved for people with disabilities.

Fellow Silicon Valley tech giant, Apple, also recently allocated more than $400 million toward affordable housing projects and homeowner assistance programs in California this year. This is a part of the company’s $2.5 billion commitment to combat the housing crisis in California.

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Sales of new houses jump to a 13-year high

Low mortgage rates and pent up demand from buyers drove sales of new houses to a 13-year high in June, according to a government report.

Builders sold 776,000 houses at an annualized and seasonally adjusted pace, a gain of 14% from the upwardly revised May gain of 19.4%, the Commerce Department said Friday in a report that counts signed contracts as sales. That beat the expectations of economists, who expected a June advance of 4%, according to a survey conducted by Trading Economics.

Houses sold at the fastest pace since July 2007 as mortgage rates tumbled to record lows set last week, when the average U.S. rate for a 30-year fixed mortgage fell below 3% for the first time in a data series that goes back to 1971, according to Freddie Mac.

While potential buyers are getting a deal with financing costs, they have to contend with a shortage of available properties in the existing home market that stretches back to last year and has been made worse by the COVID-19 pandemic.

“Pent up demand for housing has been unleashed as states have reopened, and low mortgage rates sweeten the deals,” said Robert Frick, an economist for Navy Federal Credit Union.

All U.S. regions posted a gain in sales, led by a 90% jump in the Northeast, a region that was under strict lockdowns during April and part of May. The West had an 18% increase in sales, the Midwest rose 11%, and the South advanced 7.2%, the report said.

The so-called months supply number that measures how long it would take to sell off current inventory fell to 4.7 months, the lowest in almost four years.

Measured by the state of construction – another gauge of demand – the number of properties sold that hadn’t yet been started rose to a seasonally adjusted 233,000, a more than two-year high. Builders sold 253,000 houses that were under construction, and 290,000 completed houses.

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People movers: LBA Ware, Guaranteed Rate Affinity, Transnation Title Agency, Interfirst Mortgage and Total Expert

LBA Ware has named Brian Jordan as its director of product management.

Jordan has 13 years of experience in global data aggregation and analytics firms, serving the banking and financial services sectors. Prior to LBA Ware, Jordan was a lead product manager at LexisNexis Risk Solutions.

Jim Anderson has been named as the senior vice president of strategic growth at Guaranteed Rate Affinity.

Anderson has over 30 years of experience in the mortgage industry, specializing in business development, strategic sales and risk management.

Prior to Guaranteed Rate Affinity, Anderson served in executive-level business development and sales director roles for multiple large players within the industry.

Transnation Title Agency has brought on Lavinia Biasell, its first chief legal officer. Biasell joins with over 15 years of experience in the industry.

Biasell previously worked for Fidelity National Financial as an underwriter for all of Fidelity’s Michigan title agents, as well as Maddin, Hauser, Roth & Heller, P.C., where she served as a partner at the firm representing clients in a variety of title legal matters.

Mike Tague has returned to Interfirst Mortgage Company as vice president, Western Division Production for the wholesale channel. Tague first joined Interfirst in 2011.

With 30 years of experience in the mortgage industry, Tague spent 25 years building sales teams, expanding branch operations and growing existing markets in the wholesale channel.

Tague has held the position of vice president of wholesale at numerous lenders including The Money Source, Peoples Home Equity, Ethos Lending and Finance of America Mortgage.

Total Expert has brought on Kevin Dotzenrod as vice president of Engineering and Laura Theodore as vice president of Customer Success.

Dotzenrod has over 20 years of software development, technical architecture, and engineering expertise, leading engineering and technology teams at some of the most recognized companies in finance and retail, including Target, Amazon and Dow Jones.

Most recently, Dotzenrod served as director of engineering at Target.

Theodore has over 14 years of experience leading profitable customer success and support teams for high-growth software companies internationally.

Theodore currently serves as a strategic advisor to several software companies, having most recently served as general manager at StreetSmart and as senior director of Global Support Services at ClickSoftware.

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This is your last chance to become a 2020 Vanguard

Calling all 2020 Vanguards: You’re at the top of your field, leading the housing industry to new heights. Many have already heard of you because you are making your mark through innovation, strong leadership and a drive to make the housing industry a better place.

You belong with our HousingWire Vanguards, which honors the top executives in the housing industry.

But time is short – the nomination period is closing today.

HousingWire’s 2020 Vanguard Award program recognizes C-level industry professionals and business unit leaders who have become leaders in their respective fields within housing and mortgage finance — those whose leadership is moving markets forward, each and every day.

Vanguards come from diverse backgrounds and may run established companies or startups, but share one common trait: an unmistakable impact on the industry at large. The only award of its kind, HW Vanguards recognizes the greatest leaders in housing today.

But to be considered, you have to act now. Nominate your Vanguard (and self-nominations are accepted) before midnight on Friday, July 24th.

Winners will be featured not only online with their own profile, but also in one of the largest HousingWire Magazine issues of the year: the October/November double issue. Honorees will also receive a one-year subscription to HousingWire Magazine.

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Could 2020 somehow see year-over-year growth in home sales?

This week, the National Association of Realtors reported the most significant month-to-month increase in existing home sales ever recorded.

Logan Mohtashami
Logan Mohtashami
Lead Analyst

While this has to be taken in the context of the COVID-19-induced coma the housing market has been in for the last month, the increase confirms that V-shaped recovery in housing is legit. 

Further to that, it is my opinion that sales still have legs to move higher. 

According to NAR, total existing-home sales completed transactions that include single-family homes, townhomes, condominiums and co-ops, jumped 20.7% from May to a seasonally-adjusted annual rate of 4.72 million in June. Sales overall, however, dipped year-over-year, down 11.3% from a year ago (5.32 million in June 2019).

Existing home sales are still down year over year by 11.3%, but as crazy as this might sound, we have a shot at getting positive year-over-year growth.

If the double-digit year-over-year growth in purchase application data continues, we may see an existing home sales print of 5,510,000 in 2020. 

Remember, our best monthly sales prints in the last 12 years have come in winter, not the heat months of spring or summer. 

July Existing Home Sales

This week’s Mortgage Banking Association purchase application data showed 19% year-over-year growth.

This continues the upward trend of the last four weeks, which had year-over-year growth of +19% +16% +33% +15%. Purchase application data has had a quintessential V-shaped recovery. If purchase applications stay flat to positive, year over year, we will maintain the recovery gains.

In February, we had a yearly high of 5,760,000 existing home sales, so we should have existing home sales over 5 million soon, and even get one home sales print to 5,510,000 if this high double-digit year-over-year growth continues. 

I caution people that these high levels of growth can’t be sustained, but for now, it’s still here. What a year this has been!

MBAJuly222020

Purchase application data had nine weeks of negative year-over-year data due to COVID-19, but now we have had nine weeks of positive year-over-year data, all being double-digit growth. When we see these levels of growth in application data it looks good for sales 30-90 days out.

Seasonality has kicked with this data line in terms of volumes but we still want to see flat to positive year over year trends.  

Regarding Prices

The NAR report showed that the median sales price for homes grew at 3.5% year over year.

Earlier in the year, we had 7% to 8% increases in prices year over year, which was too hot to be sustainable. I am hoping that real home prices go negative year over year basis to keep housing prices at a sustainable level.

My biggest fear for housing for the years 2020-2024 is that real home prices can grow over 4.6% due to the favorable housing demographics, the longer housing tenure reducing inventory, and lower mortgage rates. So far, prices have remained relatively stable, and this is bullish for housing overall. When the U.S. housing market showed negative real home price growth last year, I cheered that as being a good data line. 

A few weeks ago, I wrote about some things to watch for that could reverse the strong recovery in housing, but for now, the housing V-shaped recovery stands on solid ground.  

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Seller’s market: Profits on home sales climb 16% in second quarter for a total ROI of 36%

Home sellers gained on average a $75,971 profit on a typical sale in the second quarter of 2020, according to a U.S home sales report from ATTOM Data Solutions. Up from $65,250 in the first quarter, home sellers experienced a 36.3% ROI compared to the original purchase price.

The latest quarterly figure represented another post-recession high – breaking the 34.5% ROI record in the first quarter, and the 33.7% home sellers saw this same time last year.

“The housing market across the United States pulled something of a high-wire act in the second quarter, surging forward despite the encroaching economic headwinds resulting from the Coronavirus pandemic,” said Todd Teta, CPO at ATTOM Data Solutions.

According to the report, 81 of the 104 metropolitan areas the data analyzed experienced profit margin gain from the second quarter of 2019 to the second quarter of 2020. The largest annual profit margin increases occurred in:

  • Spokane, WA – up from 61.2% to 76%
  • Columbus, OH – up from 34% to 47%
  • St. Louis – up from 19.9% to 31.4%
  • Chattanooga, TN – up from 31.9% to 43.4%
  • Indianapolis – up from 30.5% to 41.9%

Aside from Columbus, St. Louis, and Indianapolis, metros with a population of at least 1 million with the greatest profit margin gains were Rochester, NY and Kansas City, MO, the report said.

However, not every metro experienced year over year gain. Despite ATTOM Data Solutions reporting East Coast housing markets are most at risk of economic impact from COVID-19, the cities that experienced the greatest drop in profit margin varied across the country:

  • Pittsburgh – down to 20.9% from 28.6%
  • Modesto, CA – down to 51.1% from 58.7%
  • Honolulu – down to 43.8% from 36.2%
  • Greely, CO – down to 35.4% from 41.5%
  • Naples, FL – down to 16.7% from 22.1%

Aside from Pittsburgh, metros with a population of at least 1 million with the greatest loss in profit margin was Denver, Grand Rapids, MI, San Francisco and Boston.

As profits and profit margins rose in the second quarter, median home prices also experienced an average 6% gain year-over-year in 97 of the 104 metros analyzed, according to the report.

“No doubt, a lot of the ongoing prosperity resulted from gains seen before the pandemic started racing through the country in February and March,” Teta said. “Indeed, there have been recent signs of prices flattening out or dropping across significant parts of the country, and the economic toll from the virus continues to be a major issue. But the second quarter results showed continuing strength in most parts of the nation.”

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