Moderated by Rick Badie
Recently, Wells Fargo Bank and various fair housing agencies announced a settlement designed to improve housing in minority neighborhoods hit hard with foreclosures. Atlanta is one of the cities that stands to benefit from the $27 million being provided by the banking giant. Today, an official with Metro Fair Housing Services writes about the potential local impact, while a real estate executive discusses the new boom in the housing market.
Pact can restore neighborhoods
By Gail Williams
Earlier this month, my Atlanta organization, Metro Fair Housing Services, announced that it will team up with Wells Fargo to make sure our communities have an equal chance at recovery from the housing crisis. With this agreement, Wells Fargo propelled itself as the industry leader committed to establishing quality standards for the way REO properties are maintained and marketed.
What are REO properties? They are “real estate owned” — homes that we see all too often around Atlanta, homes that were foreclosed upon, lay vacant and are bank-owned.
In 2012, the National Fair Housing Alliance, Metro Fair Housing Services and others published the results of our investigation into how REO properties are treated by banks. We wanted to see whether banks were treating properties differently because of a neighborhood’s racial makeup. Unfortunately, we found significant racial disparities in how banks were marketing and maintaining REO properties.
Some of the findings about Atlanta REO properties in communities of color:
* 70 percent had peeling or chipped paint; only 17 percent in white communities had the same problem.
* 40 percent had broken doors or locks; only 17 percent did in white communities.
* 42 percent had broken or hanging gutters; none in white communities did.
* 26 percent had pervasive mold on the structure, while none in white communities did.
Because of our investigation’s findings, we filed complaints with the U.S. Department of Housing and Urban Development against Wells Fargo, U.S. Bank and Bank of America. Wells Fargo stepped up and will become the first bank to improve its REO practices.
We recently announced our settlement with Wells Fargo and the bank’s agreement to put $27 million toward programs in 19 cities nationwide. These funds will promote home ownership, neighborhood stabilization, property rehabilitation and development in neighborhoods of color.
Atlanta is receiving $1.4 million. No doubt, the money will help address the effects that maintenance and marketing deficiencies caused in our communities. This will help stop the bleeding of property values in some areas.
Other banks need to step up. Bank of America and U.S. Bank have done little to improve the maintenance and marketing deficiencies of homes they own.
When we conducted our investigation a year ago, 80 percent of the Bank of America REOs in Atlanta communities of color were missing a “for sale” sign. Without a sign, potential home buyers and neighbors simply don’t know the home is available. About three-quarters of U.S. Bank properties in Atlanta’s minority communities had substantial amounts of trash. This is an easy problem to fix and should be addressed immediately.
We applaud Wells Fargo for its leadership. We appreciate its commitment to our neighborhoods and look forward to working together to improve Atlanta.
Gail Williams is executive director of Metro Fair Housing Services.
Real estate boom’s different this time
By J.D. Crowe
Recently, an Atlanta couple became frustrated with their search to purchase a home. They made several offers on homes they liked but kept losing out to higher bidders. One day, they found a home that had hit the market that very day. They were so determined to win that bid, they immediately submitted an offer — and then asked if they could see the house for the first time the next day. They just wanted to jump in line and be considered as a buyer early.
That story and others like it illustrate what is happening in Atlanta’s residential real estate market today. It has become a sellers’ market. Due to the low inventory of homes available — coupled with a large wave of qualified buyers coming back who are now looking to buy — housing prices are on the rise again in almost every submarket.
We are witnessing the beginning of a new boom in real estate. Realtors and mortgage lenders have never been busier, but it is certainly different in a number of ways than the one we all witnessed in the middle of the last decade that triggered the Great Recession. The last time we had a run-up in housing prices, it was based on buyers who had access to credit that should not have been available to them in the first place.
The government was pushing mortgage companies to allow more people into home ownership, so there were many products that allowed buyers to obtain 100 percent-financed mortgages without having to put any money down. They were able to sign a document stating how much income they earned without any verification, even if they had low credit scores. My company didn’t engage in that type of lending.
In this market, we will have a boom, but it will not be an uncontrolled boom similar to the last one. During the last five years, even though homeowners suffered through periods of price depreciation, many still invested in their homes — doing renovations and creating value. Now, they are putting their properties on the market and getting the price at which they list it or a higher one.
Much of our economy is tied to residential real estate, whether it is on the financial side, construction, landscaping, carpet, granite — you name it. There is nothing you can do to untie this economic driver from our metro area.
Atlanta will always be tied to the housing industry, but we won’t be as dependent this time on the ability to cash out or flip homes for cash. In the past decade, there was such a rapid appreciation, people used their homes as piggy banks.
Nevertheless, home ownership is popular again, and I predict it will be for a long time. The couple who recently bid on the house before they ever saw it didn’t win the bidding; they are still out there looking. They are persistent, and they will eventually be the highest bidder and be back in the housing game.
J.D. Crowe is senior vice president for Southeast Mortgage of Georgia.