Special Alert: National Fair Housing Alliance Alleges Race-Based Disparities in Treatment of REO Properties in Violation of the Fair Housing Act


In a recently published investigative report ("the Report"), the National Fair Housing Alliance ("NFHA") released the results of its examination of treatment of Real Estate Owned ("REO") properties maintained by eight banks1 in four major metropolitan areas. The Report, entitled "Here Comes the Bank, There Goes Our Neighborhood," concluded that in three of the four areas evaluated,2 banks maintained and marketed REO properties in majority African-American and Latino census tracts in a manner than was less favorable than properties in majority Caucasian or stably integrated census tracts.

In the Report, the NFHA asserts that differential treatment of REO properties, based on the racial composition of the neighborhoods in which they are located, violates the Fair Housing Act. The NFHA has signaled its intention to take legal action based on the alleged disparities and is encouraging government regulators and private plaintiffs to do the same. The Report is likely to trigger a new wave of fair housing enforcement actions and litigation based upon this novel legal theory.

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DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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