Jenna Greene writes for American Lawyer affiliates The National Law Journal and Legal Times.

Wells Fargo Bank agreed to pay $42 million to settle a complaint that it failed to maintain foreclosed properties in minority neighborhoods, turning the vacant houses into dilapidated eyesores.

The National Fair Housing Alliance and member organizations sued Wells Fargo in April 2012, alleging in an administrative complaint filed with the U.S. Department of Housing and Urban Development that the bank violated the Fair Housing Act.

The complaint alleged Wells Fargo’s so-called "real estate owned" properties in white areas were much better maintained and marketed than the properties in African-American and Latino neighborhoods. For example, houses in minority areas often had ill-kept yards, broken doors, peeling paint or boarded-up windows.

"Many neighborhoods across the country have been seriously damaged by the foreclosure crisis, including the impact of [real estate owned] homes on property values, curb appeal, and tax revenue for schools," said Shanna Smith, head of the National Fair Housing Alliance. "Our joint efforts will help lay the foundation for the industry to get some of those neighborhoods back on their feet."

The housing groups filed similar complaints against Bank of America and U.S. Bancorp, which are still pending.

Wells Fargo—represented by Skadden, Arps, Slate, Meagher & Flom partners Anand Raman and Joseph Barloon, who are both based in Washington—is the first to settle.

According to the plaintiffs, who turned to Joseph Sellers and Peter Romer-Friedman of Cohen Milstein Sellers & Toll, it’s the first-ever agreement regarding the equal maintenance and marketing of bank-owned homes.

Wells Fargo agreed to provide $27 million to the fair housing organizations to promote home ownership, property rehabilitation and development in 19 communities of color, including areas of Baltimore, Washington D.C. and Prince George’s County, Md.

Another $3 million goes to the housing organizations to cover costs and attorney fees. The bank will also pay HUD $11.5 million to support neighborhoods in an additional 25 cities.