Following the world financial collapse that started in 2008, scores of homes in the Austin neighborhood of Chicago — already economically depressed — were handed over to banks in foreclosure.
Many of the so-called Real Estate Owned (REO) homes — in Austin and other parts of the country — fell into disrepair, prompting an administrative complaint to the U.S. Department of Housing and Urban Development by more than a dozen fair housing organizations across the nation.
Members of the National Fair Housing Alliance alleged that Wells Fargo systematically engaged in “differential treatment in maintaining and/or marketing its REO properties on the basis of race, color and/or national origin.” REO homes in more affluent white neighborhoods were kept in better condition than those in black and Latino neighborhoods in violation of the federal Fair Housing Act, they claimed.
Anne Houghtaling, executive director of the West Chicago-based HOPE Fair Housing Center, said in a telephone interview that REOs in black and Latino neighborhoods suffered from overgrown grass, boarded-up and broken windows and other problems compared to their white counterparts.
“For example, in an overall study, 47 percent of properties in communities of color had substantial trash on the premises,” she said. “Twenty-two percent of properties [also REOs] in white communities had the same issue.”
Wells Fargo reached a settlement agreement with the alliance in 2013, paying out a combined $42 million to 44 communities. About $1.4 million of that settlement was awarded to HOPE, which is now using some of those funds to help renovate 2- to 4-flat buildings in Austin to help get them back on the market.
Houghtaling said about half of the $1.4 million is being channeled to the Austin Ascending program, which distributes small grants to property owners in Austin to help get their buildings ready for tenants. The matching grants of up to $4,000 are being distributed through the Oak Park Regional Housing Center. Owners must put up $1,000 to receive the $4,000 match.
“A lot of the housing stock in Austin is 2- to 4-unit buildings that are owner-occupied; it benefits the entire community to bring those back on the market,” she said.
Jessica Hartshorn, program director with the Oak Park Regional Housing Center, said about $180,000 has been sent to OPRHC for the Austin Ascending program, roughly $30,000 of which has been used for administrative costs associated with the program.
Roughly a dozen owners have used the funds to improve about 15 units, she said, and the program is still approving grants. The funds are being used to make empty units more marketable. Installation of ceiling fans, fresh paint jobs and improvements to various finishes in the apartments are among some of the fixes, she said.
“A lot of these units in Austin have a lot of great features,” she said. “We’re just sprucing them up a little bit.”
Hartshorn said the Austin neighborhood still has “a ton” of vacant units, making it difficult for owners to make their payments and jeopardizing their ability to keep their properties.
The program, she says, will improve the neighborhood and the housing market.
Rob Breymaier, executive director of the Oak Park Regional Housing Center, said his organization has been trying to get the Austin Ascending program funded for about five years now. He said the program stipulates that rehab projects must use contractors within the community or with strong ties to the community, so “the residents of Austin are benefitting” from the work.
“It’s about improving the marketability of the units in Austin and making Austin a more desirable place to live,” he said.