CIT Group Accused of Redlining and Violating Fair Housing Act

CALIFORNIA REINVESTMENT COALITION AND FAIR HOUSING ADVOCATES OF NORTHERN CALIFORNIA FILE FAIR HOUSING COMPLAINT, URGING IMMEDIATE HUD INVESTIGATION INTO CIT GROUP’S ONEWEST BANK

San Francisco, CA, Nov. 18, 2016 – (RealEstateRama) — Yesterday, two nonprofit organizations formally filed a complaint requesting that the federal Department of Housing and Urban Development (HUD) investigate whether CIT Group violated and continues to violate the Fair Housing Act through its subsidiary, OneWest Bank. In 2014, CIT Group applied to acquire OneWest Bank, and after receiving regulatory approvals, the merger was completed in August, 2015.

The complaint alleges that OneWest Bank has violated the Fair Housing Act (FHA) through redlining practices such as failing to locate branches in communities of color and extending very few or no mortgage loans to borrowers of color. It also alleges OneWest maintained and marketed REO homes in predominantly white neighborhoods better than in neighborhoods of color.

The complaint can be downloaded here, and a supplemental narrative is available here.

Kevin Stein, deputy director of the California Reinvestment Coalition, explains: “Our analysis of OneWest suggests the bank has no significant branch presence in communities of color, and not surprisingly, its home loans to borrowers and communities of color are low in absolute terms, low compared to its peer banks, and low when compared to what one would expect, given the size of the Asian American, African American, and Latino populations in California. During 2014 and 2015, OneWest originated exactly two mortgage loans to African American borrowers in its assessment area. OneWest was far more likely to foreclose in communities of color than to make loans available to people in these communities. We call on HUD to fully investigate CIT’s redlining practices and to hold the bank accountable for its actions and the harm it has caused to communities.”

“Our investigation revealed troubling differences in how OneWest homes maintained their bank-owned homes (REOs) in predominantly white neighborhoods vs. neighborhoods of color,” comments Caroline Peattie, executive director of Fair Housing Advocates of Northern California (formerly Fair Housing of Marin). “The majority of OneWest REO homes in communities of color looked abandoned, had trash strewn about the yard and boarded up doors and windows, and weren’t clearly marketed as ‘for sale.’ In contrast, almost all of OneWest’s REO homes in white communities were well-maintained, had manicured lawns, and were clearly marketed as ‘for sale.’”

Sharon Kinlaw, executive director of the Fair Housing Council of San Fernando Valley, adds: “The evidence included in this complaint suggests that OneWest Bank has steered clear of people of color in its assessment areas for a number of years. We want to know how many people were harmed and we look forward to learning what HUD finds out.”

Hyepin Im, founder and president of Korean Churches for Community Development, adds: “It was really disappointing for me to review the data and to see that even in 2016, it appears our communities are being redlined. We hope HUD will investigate this complaint and take decisive action to ensure people aren’t being excluded because of the color of their skin.”

Chancela Al Mansour, executive director of the Housing Rights Center, adds: “This complaint raises serious concerns about the extent to which people of color have been cut off from branches, mortgages, and other banking services that OneWest should be providing in the communities where it does business.”

The Fair Housing Act prohibits discrimination based on race, color, national origin, religion, sex, disability, or familial status, as well as on the race or national origin of residents of a neighborhood.

The complaint focuses on 3 primary ways OneWest is alleged to violate the Fair Housing Act:

1) OneWest Bank Branches appear to avoid communities of color: OneWest’s sparse branch presence in communities of color effectively makes banking services and credit products (including mortgages) less available to people based on their race, color, and national origin, according to the complaint.

(Branch data and mapping courtesy of National Community Reinvestment Coalition)

2) OneWest Makes Very Few Mortgage Loans to Asian American, African-American, and Latino Borrowers in its six-county assessment area. According to Home Mortgage Disclosure Act (HMDA) data, OneWest Bank made very few mortgage loans to borrowers and communities of color. Its home loans to borrowers and communities of color are low in absolute terms, low compared to its peer banks, and low when compared to what one would expect, given the size of the Asian, African American, and Latino populations in California.

3) OneWest REO Homes Better Maintained in White Neighborhoods:
Fair Housing Advocates of Northern California investigated how well OneWest Bank maintains and markets homes after foreclosing on the underlying mortgage- otherwise known as Real Estate Owned (REO) homes. FHANC looked at OneWest REOs in Contra Costa and Solano Counties from April 2014 to May 2016, and found that properties in White communities were generally well maintained and well marketed with manicured lawns, securely locked doors and windows, and attractive, professional, “for sale” signs posted out front. This was not the case for the majority of REOs in communities of color where REO properties were more likely to have trash strewn about the premises, overgrown grass, shrubbery, and weeds, and boarded or broken doors and windows. OneWest REOs in communities of color appear abandoned, blighted, and unappealing to potential homeowners, even though they are located in stable neighborhoods with surrounding homes that are well-maintained.

FHANC found the following patterns based upon its investigation of sixteen REO properties owned by OneWest in Solano and Contra Costa Counties:

• 100.0% of the REO properties in communities of color had 5 or more maintenance or marketing deficiencies, while only 33.3% of the REO properties in predominantly White communities had 5 or more deficiencies.
• 53.8% of the REO properties in communities of color had 10 or more maintenance or marketing deficiencies, while none of the REO properties in predominantly White communities had 10 or more deficiencies.
• REO properties in communities of color were far more likely to have certain types of deficiencies or problems than REO properties in predominantly White communities.

Complainant FHANC found significant racial disparities in the majority of the objective factors it measured, including the following:

• 61.5% of the REO properties in communities of color had substantial amounts of trash on the premises, while none of the REO properties in predominantly White communities had the same problem.
• 61.5% of the REO properties in communities of color had unsecured or broken doors, while none of the REO properties in predominantly White communities had the same problem.
• 61.5% of the REO properties in communities of color had a damaged fence, while none of the REO properties in predominantly White communities had the same problem.
• 61.5% of the REO properties in communities of color had no professional “for sale” sign marketing the home, while none of the REO properties in predominantly
• White communities had the same problem.53.8% of the REO properties in communities of color had damaged siding, while none of the REO properties in predominantly White communities had the same problem.

The complaint can be downloaded here, and a supplemental narrative is available here.

Pictures are available at these links

Picture of Graph comparing OneWest lending record in communities of color vs. foreclosures. (Fact sheet explaining methodology for graph)

Map of OneWest branches in 2015, in MSA with minority percent greater than MSA average.

Map of OneWest lending in 2014 in Majority Asian American, African American, and Latino communities.

Map of OneWest REOs in the Bay Area.

Map of OneWest foreclosures in Los Angeles area as compared to majority minority zip codes. Note: 68% of OneWest’s foreclosures from April 2009 to April 2015 occurred in zip codes where non-white residents represented a majority of the population in the 2010 Census.

Additional foreclosures maps are available here.