Things Fall Apart (Next Door): Discriminatory Maintenance and Decreased Home Values as the Next Fair Housing Battleground

Abstract

Banks that once preyed on communities of color through predatory lending now drive property values down by failing to adequately maintain foreclosed properties they own in those neighborhoods. Declining home values are especially destructive in communities of color because the family home is often a household’s most significant asset and, thus, the key to accumulating wealth and creating opportunity. This article argues that neighboring homeowners whose property values have declined as a result of banks’ discriminatory maintenance of foreclosed properties have standing to sue those banks under the Fair Housing Act (FHA). This article explores historic barriers to homeownership in communities of color. It then analyzes fair housing case law and recent studies about bank maintenance to show how banks violate the FHA by failing to maintain their foreclosed properties in Black and Latinx neighborhoods to the same extent that they do in White neighborhoods. Finally, the article uses legislative history and a recent Supreme Court decision about a city’s standing to bring a case to argue that neighboring homeowners fall within the FHA’s zone of interest. By showing how the drafters of the FHA saw access to housing as a way to promote access to opportunity broadly, this article expands fair housing law to cover people not historically protected by this important civil rights legislation.

Keywords: fair housing; housing; discrimination; foreclosure; homeownership; real estate owned (REOs); maintenance