Saturday, February 27, 1999

Insurer settles bias claim

Fund will help pay for homes

The Cincinnati Enquirer

        Thousands of renters in Cincinnati's poorest neighborhoods could become homeowners as a result of a settlement announced Friday between Nationwide Insurance and fair-housing advocates.

        A year ago, seven black homeowners, Housing Opportunities Made Equal (HOME) and the NAACP Cincinnati branch filed suit in federal court accusing Nationwide of “redlining” several low-income, mostly African-American neighborhoods. The lawsuit was one of several brought against Nationwide and other large home insurers in recent years.

        “I think this settlement is going to mean a lot for this city, especially for its African-American neighborhoods,” said Karla Irvine, executive director of HOME. “This creates a new opportunity for a lot of people paying rent ... good, working folks who can't save up enough to get a mortgage.”

        The five-part deal, reached after months of mediation, includes $500,000 for low-interest home improvement loans to help people qualify for home insurance, $750,000 for special savings accounts for mortgage down payments, a sales office in an urban neighborhood, and a promise to offer full replacement value policies for houses in urban neighbor hoods.

        The most intriguing aspect of the deal is the $750,000 fund to create “Individual Development Accounts.” These accounts would offer a dollar-for-dollar match to qualified individuals trying to save up for down payments.

        Picture it this way: a risk-free bank account that offers 100 percent interest rates. There are no other investments — not even getting in on the ground floor of the next Microsoft stock — that offer such high returns with no risk.

        Before people start lining up to open accounts, however, the parties have to work out more details, including which bank will handle the fund.

        Nationwide officials said the settlement reflects “a continuation of Nationwide's active program to enhance its presence in urban communities throughout the country.”

        “Nationwide believes that the urban communities of the Cincinnati area are viable and desirable,” said Lorraine Brock, associate vice president of urban markets development at Nationwide.

        The neighborhoods affected by the settlement include: Avondale, Bond Hill, Corryville, Evanston, East Walnut Hills, Fay Apartments, Kennedy Heights, Lincoln Heights, Madisonville, Mount Auburn, North Avondale, Paddock Hills, North Fairmount, Over-the-Rhine, Roselawn, South Cumminsville, Millvale, Walnut Hills, West College Hill, Winton Hills and Woodlawn.

        There will be income limits to qualify for the loans and savings programs. But there won't be any limits on where people can buy their houses. Any person living in the targeted neighborhoods could use the money to help buy a house wherever he wants, Ms. Irvine said.

        To settle a case alleging discrimination against homeowners in low-income, mostly African-American neighborhoods, Nationwide Insurance agreed to:

        • Provide $750,000 to create a dollar-for-dollar matching fund for people opening special savings accounts for mortgage down payments.

        • Provide $500,000 for low-interest home improvement and/or mortgage loans.

        • Open a sales and service office in an urban Cincinnati neighborhood.

        • Reaffirm its decision to stop denying full coverage to people who own older, urban houses.

        • Support local fair-housing outreach programs.


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