When Austin resident Mae Campbell moved into her house 33 years ago, she remembers, every house on the block was occupied.

But now, as the 64 year old sits in yellow pajamas and plaid slippers at a glass table in her modest home in the 4700 block of Erie Street, the view outside is much bleaker.

Campbell’s home is still well-maintained, but the vacant home next door has boarded-up windows, and the empty lots across the street have knee-high grass.

Numerous houses stand empty, many because of foreclosure. Squatters in the derelict homes have ruined the neighborhood, she said.

“They break into the homes and live,” she said. “I am afraid they are going to start a fire for heat and it will burn down my home.”

Campbell’s damaged neighborhood is part of a wide legal fight between fair-housing groups and Bank of America. While she frets about her safety, lawyers are arguing over what critics call a dual standard in Bank of America’s treatment of foreclosed properties it owns or manages.

The National Fair Housing Alliance has filed a legal complaint against the bank, alleging the company treats foreclosed homes in white neighborhoods with care, while it neglects foreclosed homes it owns in low-income, non-white neighborhoods.

“It is disheartening to see the devastation in certain communities, because Bank of America doesn’t treat all neighborhoods equally,” said Anne Houghtaling, executive director of HOPE Fair Housing Center in Wheaton, a member of the NHFA alliance.

The group originally filed suit against the bank for its handling of non-white properties in several cities, and last month added Chicago and two other Midwestern cities to the complaint.

Bank of America is violating the federal Fair Housing Act, the complaint says, by maintaining properties “in a state of disrepair in predominantly African-American, Latino and other non-white Communities,” while maintaining and marketing such properties in predominantly white communities “in a materially better condition.”

Bank officials deny any wrongdoing.

“Bank of America is committed to stabilizing and revitalizing communities that have been impacted by the economic downturn, foreclosures and property abandonment,” said Richard Simon, media relations officer at Bank of America Home Loans. And in Chicago, he said, the bank is no longer the owner of many of the properties that NFHA cites.

“We have reviewed the 13 properties that NFHA identified in its announcements and found that we currently are responsible for only two of those properties. The remainder were conveyed back to the investor at the time of the foreclosure or have already been marketed and sold to a third party after foreclosure sale,” Simon said.

The difference between the two types of neighborhood, as spelled out in the suit, is striking.

The HOPE Fair Housing Center conducted a study of white and minority neighborhoods in Chicago and found that foreclosed homes in minority neighborhoods are 12.3 times more likely to have damaged windows, and 4.7 times more likely to have broken doors.

That matters, said Yittayih Zelalen, co-director of the Nathalie P. Voorhees Center for Neighborhood and Community Improvement at the University of Illinois at Chicago.

“Damaged windows and broken doors lead to depressed home values, safety issues and a continued deterioration of the community,” Zelalen said.

Campbell is determined not to let that happen to her neighborhood. Two years ago, she put in an offer to buy the foreclosed home next door for $15,000, but she said Bank of America never responded to her offer. Instead, she said, the bank sold it to an investor group for one dollar. Nothing’s happened to the property since then, Campbell said.

“I am not sure what to do now,” she said.

Meanwhile, the neighborhood’s decline is taking an economic toll on homeowners like Campbell. Insurance adjusters have raised the price of her home insurance, because of safety concerns. Her policy rates are going up, even though appraisers have reduced her home’s value, making it harder for her to refinance it.