lenders deny mortgages to African Americans at twice the rate of of whites
By Hazel Trice Edney
(TriceEdneyWire.com) – The new “commander and chief” of Black Homeownership in America has released a new strategy for raising the numbers that have plummeted to percentages below the time of the Fair Housing Act of 1968. But accomplishing that fete could prove more than daunting as the 2019 State of Housing in Black America (SHIBA) report – released this week – reveals the situation to be at crisis level, according to leaders in Black homeownership. [su_pullquote align=”right”]Homeownership can increase a family’s financial security. The drop in black home ownership contributes to the racial wealth gap.[/su_pullquote]
“Someone needs to proclaim and declare a cease and desist on the declining rates of Black homeownership. Someone needs to bring some programs and highlight this epidemic, this crisis in our community…I pray that I am up to the task,” says Donnell Williams in a recent interview following his swearing in as the 31st president of the National Association of Real Estate Brokers (NAREB), the 72-year-old organization founded to secure “equal housing opportunities, regardless of race, creed, or color.”
A member of NAREB for 16 years, Williams, owner of Destiny Realty and the largest independent Black real estate broker in the state of New Jersey, describes himself as “boots on the ground”, a posture from which he is able to see up close and personal the hindrances and the obstacles to Black homeownership– and how to fix them.
The SHIBA report, researched primarily by the Urban Institute and released annually by NAREB, in order to “shed light on the public policies, private sector practices and other systemic disparities preventing Black Americans from purchasing a home of their choice,” reports this week that “all gains in Black homeownership that had been achieved between 1968 and 2004, had been erased by 2018.”
The following are just some of the chief findings:
- The homeownership rate for Black households stood at 40.6 percent in the second quarter of 2019 – a full percentage point lower than 2018’s second-quarter rate of 41.6 percentage points. The current homeownership rate for Blacks is currently below the 1968 level of 40.9 percent at the time of the passage of the Fair Housing Act.
- Homeownership for non-Hispanic Whites stands at 73.1 percent, down from its high of 76 percent in 2004.
- Blacks have experienced the most substantial loss of homeownership since 2004, declining more than 8.5 percentage points, or 17 percent, as compared to the less than 4 percent decline for non-Hispanic Whites. In other words, Blacks have lost more than four times the share of homeownership as non-Hispanic Whites since 2004.
- Half of all Blacks born between 1956 and 1965 were homeowners by the age of 50. Blacks born between 1966 and 1975 have a homeownership rate of just above 40 percent and are thus unlikely to achieve a 50 percent homeownership rate by their 50th birthdays. Black millennials, if current trends continue, may fail to achieve a homeownership rate of 40 percent by the age of 50.
- The gap in homeownership rates between Blacks and non-Hispanic Whites is larger now than it was in 1934, the year of the enactment of FHA (Federal Housing Administration) and the start of modern housing finance system.
SHIBA places the plummeting levels of Black homeownership squarely at the feet of loan denials, largely because of debt to income ratio and credit scoring.
“For Black applicants, overall denial rates for home purchase loans were double those of non-Hispanic White applicants—18 percent versus 9 percent, unchanged from 2016,” the report states. It adds, “The Black denial rate for conventional loans is down significantly [from] its high of 36 percent (versus 19 percent) at the height of the foreclosure crisis in 2008.
The report continues, “Debt-to-income ratio was the most common reason for denial reported for Black applicants—at 31 percent compared to 20 percent for non-Hispanic White applicants. Credit history was the second most prevalent reason for denials among both Black applicants (25 percent) and non-Hispanic White applicants (20 percent).”
Williams says he believes he has a winning strategy that will take up arms against the key hindrances. He was set to release that strategy this week in a press conference and conversation with national leaders. Among the key programs and initiatives, according to a NAREB release this week:
- House Then The Car – A campaign targeted to the 1.7 million American millennials and generation x populations who make over $100k per year and who are home buyer ready but are currently renting.
- Realtist Opportunities For Seasoned Individuals (ROSI) – An initiative that addresses the wholistic needs (buying/selling real estate, life insurance, retirement, health insurance, etc.) of people over 40 years of age, or parents of any age.
- Civic Engagement – Program that identifies and cultivates a host of “Allies” that expand beyond established networks of partners and faith-based communities. These “Allies” would include Black Chambers of Commerce, Greek organizations, minority professional organizations and more.
“This is a moment in our history to demand a cease and desist in the denial of equal access to mortgage credit and homeownership for the nation’s Black Americans,” Williams concludes in a letter as part of his “Message from the President” in the SHIBA report. “After you have read our report and are armed with both an understanding of the barriers faced, and solutions required, I encourage you to support NAREB’s efforts. Whether you are a policymaker, regulator, mortgage lender, real estate professional, housing or civil rights advocate, faith-based leader, trade association executive, non-profit organization representative, housing counselor, Black head of household or student, there is a place for you on our team. NAREB’s work is guided by three words: Educate, Empower and Mobilize. With these three words as our guide, NAREB is confident it will succeed in increasing Black homeownership and wealth in America.”