The National Fair Housing Alliance filed a complaint against Safeguard Properties alleging violations of the Fair Housing Act of 1968.
According to the complaint filed by the National Fair Housing Alliance:
Respondents have engaged in a pattern of discrimination through their selective fulfillment of their FSV responsibilities based on race.
Specifically, Respondents maintain Fannie Mae properties located in White census tracts noticeably better than they maintain
Fannie Mae properties located in predominantly African-American and Latino neighborhoods in the same metropolitan area.
Respondents have engaged in such discriminatory conduct in communities across the country, including Dayton, Ohio; Indianapolis, Indiana;
Chicago, Illinois; Charleston, South Carolina; Memphis, Tennessee; Denver, Colorado; and Baton Rouge, Louisiana.
The National Fair Housing Alliance claims that Safeguard Properties' unlawful behavior is deteriorating and neglecting
structures in minority communities, as compared to well-maintained, attractive properties in White neighborhoods.
Respondents’ conduct has impeded neighborhood stabilization and economic recovery, and harmed investors, homeowners,
and municipalities by unnecessarily depressing property values.
http://www.nationalfairhousing.org/Portals/33/SafeguardAmendedComplaint.pdf
If the property is not properly maintained and the mortgagee decides the property is a liability, some mortgagees
give Safeguard Properties the property for free or nearly free. What's the financial incentitive for Safeguard Properties to properly
maintain and safeguard this property?
The Slavic Village area in Cleveland, Ohio is considered one of the areas hardest hit by the foreclosure crisis. Nearly the entire area is blighted.
Safeguard Properties had contracts with mortgagees to maintain and safeguard property in this area. This area has not been properly
maintained / safeguarded, and property value is severely depressed. Mortgagees are now giving Safeguard Properties property located in the
Slavic Village area to get it off their books- write it off. What's the financial incentitive for Safeguard Properties to properly maintain and safeguard this property?
Safeguard Properties promote demolition. Safeguard Properties is paid to preserve foreclosed property. This is a conflict of interest.
"Fernbacher’s company GSPS is a contractor for several property preservation firms. All they do is tear down homes.
They are the last resort for many communities all over the country overrun with blight.
One of Fernbacher’s clients is Safeguard Properties, the Ohio-based property preservation firm. Its founder Robert Klein is taking Fernbacher
around the country this year from conference to conference on a demolition crusade, to convince cities to pursue the clean slate their hardest hit communities crave.
Their first opportunity is a quiet place left even more silent after the housing downturn. In Slavic Village, a community located in Cleveland, Ohio, home prices
plummeted from nearly $150,000 during the housing boom to roughly $39,000 today, according to data from Altos Research.
Safeguard and GSPS will start a pilot program this year to demolish 2,200 Slavic Village homes that are considered beyond saving. But it isn’t as simple as that.
Safeguard placed all Slavic Village properties into three categories.
Owner-occupied homes fall into the first category, homes in need of rehabilitation but vacant are the second category, and the third category consists of ones that need to come down.
Most of the properties sit in either of the first two categories, but any progress waits on tearing down the ones in category three.
“No developer will come in when you have five occupied properties, five vacant properties and one that needs to be demolished.
Those five properties are affordable, and can be rehabbed fairly cheaply. But nobody will come in until you’ve demolished that one property,” Klein said.
“What we’re doing now is we’re putting together a model to make this thing work in Slavic Village. If it works in Slavic Village, we can do this anywhere in the country.”
http://www.housingwire.com/articles/creative-destruction?v=preview
Cuyahoga County officials are in the process of giving Safeguard Properties hundreds of properties located in the blighted Slavic Village area.
Thousands of houses are in need of demolition in this area.
The same blighted area Safeguard Properties was paid to preserve foreclosed property.