Earlier this week a number of fair housing advocacy groups filed a lawsuit in U.S. District Court in Maryland asserting that a major financial institution and a property management company are violating the Fair Housing Act (FHA) by exposing predominately minority communities to economic harm, increased crime, and a less than optimal quality of life by failing to market and maintain its foreclosed properties in the same condition as the financial institution does in communities with a majority of Caucasian residents.

Based on a claimed multi-year investigation involving over 1,600 foreclosed homes in more than 30 metropolitan areas, the complaint alleges that bank-owned homes in communities of color are more likely to have overgrown grass, unsecured doors as well as various health and safety problems when compared to better maintained homes located in predominantly white communities.

The plaintiffs assert they want to hold the defendants responsible for “unjust policies and practices” while the bank contends it applies “uniform practices to the management and marketing of vacant bank-owned properties…regardless of their location.”

This is one of a series of actions filed by fair housing advocacy groups against lenders across the country in an effort to use disparate impact to assert claims of discrimination by banks and property management entities in predominantly African American and Latino communities. These groups are using the FHA in an effort to combat perceived segregation. Defendants will rely on their records and will likely try to increase the size of the statistical areas identified by the plaintiffs in an effort to weaken the disparate impact claims involving demographics.  There is a long way to go here.  I will be certain to report back as the case progresses.

Just A Thought.