Friday, May 24, 2024

Charlene Crowell: America Open Doors & Give Fair Access

Charlene Crowell, America
Charlene Crowell: America Must Open Doors & Give Fair Access

*America – Although many American families have modest financial means, there is
nothing small about their hopes. Owning a home has long been an important
part of the American Dream.

America must equalize access to home ownership and its wealth opportunities.

Just as a college education can open doors to America’s middle class, a home
is more than just where families come at the end of the day. It is also
where children are raised, memories are created and – how historically most
American families built wealth.

Discriminatory government policies of the past prevented many Blacks and
Latinos from building wealth via homeownership. Older consumers may still
recall the difficulties of obtaining a mortgage loan before laws were
enacted to require equal credit access.

Despite these laws, discriminatory lending practices during the recent era
of subprime loans erased many of the financial gains that Black and Brown
families made since the enactment of the Community Reinvestment Act.

Instead, these consumers were targeted for predatory, unsustainable loans. A
key measure of the foreclosure crisis is that these families lost $1
trillion in wealth.

Even families whose homes were preserved but located nearby multiple
foreclosures also lost wealth. Many of these families still remain
underwater on their homes – owing more than they are now worth.

Nowhere is this reality truer than in America’s most populous state:
California. New research by the Center for Responsible Lending (CRL),
highlights how post-housing crisis lending trends perpetuate racial wealth
gaps and housing segregation. Additionally, these practices erect yet
another barrier to wealth creation for these communities.

CRL’s analysis  of first-lien, owner-occupied home purchase mortgages made from 2012-2014, reveal a lack of access to conventional mortgages for many Black and Brown consumers – even
when these consumers had higher incomes greater than the median areas where
they live.

“These post-crisis mortgage lending trends in California help to inform our continuing national discussion of homeownership and the importance of responsible mortgage credit,” commented Sarah Wolff, report author and a CRL
senior researcher.

“The communities that lack access to mortgages
post-crisis are the very same communities that were disproportionately affected by foreclosures and lost wealth during the housing crisis.”

CRL’s analysis of Home Mortgage Disclosure Act (HMDA) data in California
found that:

  • More than two-thirds of homebuyers in every race or ethnic group had
    middle or high incomes for their area;
  • Among Black consumers receiving mortgages, 79 percent had middle or high
    incomes relative to other households in their areas. Similarly, among Latino
    borrowers, 66 percent had these same income levels.
  • Few conventional mortgages, the most affordable and sustainable loans,
    were made to African-American and Latino consumers; and
  • The dearth of access to conventional mortgage loans shifted Black and
    Latino homebuyers to higher-cost, government-insured mortgage loans such as
    VA and FHA. Most of the homes purchased were also in majority minority
    census tracts.

“Recent law [Dodd-Frank Wall Street Reform Act], has made today’s loans much
safer for borrowers than those of the past,” states the report. “Most
importantly, the law’s Ability-to-Repay requirement ensures that lenders
confirm that a potential borrower can afford the loan. However, restricted
access to credit in the post-crisis period has resulted in the very same
families and communities which have been historically disadvantaged finding
it difficult to access today’s responsible mortgages.”

CRL’s analysis found that Asian-Americans were the only consumers of color
to enjoy broad mortgage access in California. Whites and Asian-Americans
combined accounted for more than 75 percent of all mortgage loans reviewed
during the study period.

The report also analyzes four large California counties: Alameda, Fresno,
Los Angeles and Solano. While regional differences are apparent, statewide
trends were also evident in these counties. For example, Black consumers who
represent 14 percent of Solano’s population, received only 8 percent of that
county’s loans and 72 percent of those were government-insured loans.

Similar figures for Blacks were consistent in the other three counties
studied, with African-American borrowers in both Los Angeles and Alameda
Counties receiving 4 percent of respective county loans. In Fresno County,
Blacks received only 2 percent of that county’s mortgage loans.

Smaller lenders focused on these populations and geographies compared with
larger lenders. Although California’s largest lenders made the greatest
number of loans to Blacks and Latinos, these populations, they represented a
much smaller share of overall originations for the state’s largest lenders.
By contrast, some smaller lenders, though generating fewer loan totals,
appeared to focus on serving Latino borrowers in particular.

Over the coming decade, people of color are expected to represent
three-quarters of all household growth. The report also connects its
findings to these shifting national demographics.

“If the trends found here continue, few families will become homeowners,with implications for overall national wealth and for the health of the real estate market,” concluded the report.




Charlene Crowell


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