Stephen M. Dane is a partner with Relman, Dane & Colfax PLLC  in Toledo, Ohio. Mr. Dane practices civil rights law primarily in the areas of fair housing, insurance redlining, mortgage lending discrimination, and equal credit opportunity. Dane has testified before both houses of Congress on mortgage lending discrimination issues, and regularly speaks to lenders, private fair housing groups, and state and federal investigators on the topic. He is the author of many articles in the field.
Dane represented the National Fair Housing Alliance  (NFHA) in their complaint filed with HUD  in 2012 against U.S. Bank  accusing the Minneapolis-based bank of racial discrimination in REO maintenance. NFHA alleged that U.S. Bank better maintained REO properties in primarily white neighborhoods than communities mostly populated by minorities. Earlier in January, HUD concluded after an investigation  of the properties in question that there was not enough evidence to show a pattern of discrimination in U.S. Bank's REO maintenance based on race. Dane recently spoke with DS News about HUD’s conclusion.
What is next for this case? Is it currently under appeal, and if so, do you plan to present further evidence that you did not present the first time?
My clients will request a reconsideration, pointing out several factual and legal errors in the initial determination as well as evidence that we believe the Boston Field HUD Office missed or omitted. My clients are still reviewing the determination and preparing responses. We do not have a specific deadline for filing the request, but it will probably be filed within the next few weeks.
HUD said in its ruling that the photographic evidence presented did not provide enough context to prove a pattern of discrimination based on race. What is NFHA's response?
My clients presented more than just photographic evidence. We understand this statement to support our belief that the HUD Field Office did not consider all of the evidence at hand in making its decision. In any event, we will provide a more detailed response to this issue in the request for reconsideration.
What other evidence was presented besides the photographs?
We provided inspector notes and assessments. We are not sure why HUD did not mention them.
Do you believe that the sample size presented (119 homes) is really representative of the whole?
Sorry, but this question makes no sense. It assumes a characterization of the investigation, largely promoted by U.S. Bank, that is erroneous. The investigation was not a social science study. There was no “sampling” of properties. This was simply a testing investigation conducted on a larger scale than normal. Like all traditional testing investigations, and as explained in NFHA’s complaint, NFHA first defined the neighborhoods it would investigate. This is similar to choosing which apartment complexes owned by a single landlord that a fair housing agency wants to test. Once those neighborhoods were defined, NFHA inspected 100 percent of U.S. Bank’s REO properties in those neighborhoods. This is a far greater number of transactions to investigate than a traditional testing investigation involves, which is typically only two or three transactions. The REO inspections within comparable neighborhoods were all conducted within the same, short time span. In the rental analogy, this is similar to conducting tests within the time period that a vacant apartment is known to be available for rental. Because this was simply a large scale testing investigation, concepts like “sampling” and “representative of the whole” do not make sense.
What is your response to the critics who say that complaints like this are a shakedown or that they have no merit?
This argument has been around since enforcement of the Fair Housing Act began in the 1970s. Fair housing victims and advocates, including NFHA, continue to win their cases. If there was no merit to NFHA’s REO investigation or its methodology, it is hard to understand why Wells Fargo resolved a similar complaint  (investigated by a different HUD Region) for $42 million.
Do you think HUD's ruling has any broader implications for the housing market?
I don’t think you can say this is a HUD ruling yet. It is just one regional office’s initial determination.
Editor's note: Click here  to view NFHA’s complaint against U.S. Bank, which was originally filed in April 2012 and amended in November 2014.