Black families need federal down payment assistance program to boost LA homeownership
NAREB cites discriminatory housing policies, urges US Senate to pass legislation
LOS ANGELES, CALIFORNIA, USA, July 11, 2022 /EINPresswire.com/ — With soaring home prices and endemic housing discrimination for decades, black homeownership in the metro area of Los Angeles needs a significant boost from the federal government. Support, such as a federal down payment assistance program, can help families and individuals build wealth and generate pride in their communities.
In Los Angeles, black homeownership fell to 34.6%, the 124th lowest among metropolitan areas nationwide, according to researchers at Stacker Newswire. There is a 17% gap between homeownership rates for blacks and whites (51.7%).
“A legacy of discriminatory policies and practices has prevented black people from creating intergenerational wealth, as white families have. Much of that wealth came from the equity in homes purchased over the past century,” said Mark Alston, owner of Alston Associates Mortgage Company and chair of the National Association of Real Estate Brokers (NAREB) Public Affairs Committee. ).
In Washington, lawmakers acknowledge the barriers limiting black homeownership but have failed to take enough corrective action. The House passed a $10 billion down payment assistance program for first-generation first-time homebuyers under HR 5376, the original Build Back Better Act. But it has stalled in the Senate where negotiations are underway to determine which provisions will go forward.
Alston argued that down payment assistance is key to increasing black homeownership. “Many black families earn enough to make monthly mortgage payments, but lack the savings to pay the required 20% down payment,” Alston said, noting that national data shows whites have eight times black wealth.
Lydia Pope, president of NAREB, said numerous studies have documented federal entities such as Fannie Mae, Freddie Mac and the Federal Housing Administration (FHA) systematically discriminating against and restricting mortgages to black people.
In fact, FHA mortgage insurance was largely denied to blacks from the 1930s until the Kennedy administration. “Homeownership was the vehicle that lifted white families from working class to middle class,” Pope said. “The wealth creation made possible through these public/private partnerships for white families has been denied to black families.”
Additionally, Pope said, “History matters because the wealth built by white families is passed down to millennials today through their grandparents and great-grandparents. This money is often the down payment assistance white millennials receive. Black families don’t have 2nd and 3rd generation wealth to pass on to millennial grandchildren. This is due to racial discrimination from the government and the real estate industry.
Thus, NAREB sees federal action now as a remedy for past racial prejudice.
In addition to the Down Payment Assistance Scheme, NAREB says Loan Level Pricing Adjustments (LLPA) should be removed. When families qualify for mortgages, LLPAs allow lenders to adjust interest rates upward based on credit scores. And private mortgage insurance companies can also increase their mortgage insurance rates. An in-depth study by the Journal of Financial Economics found that equivalent-risk Latinx/Black borrowers pay significantly higher interest rates on GSE-securitized and FHA-insured loans due to LLPAs. These rate differences cost minority borrowers more than $450 million a year.
NAREB is also calling for federal action that would create uniform calculations for student loans on debt-to-income ratio estimates for mortgage applications. Standard guidelines are needed for FHA, Fannie Mae, Freddie Mac and Veterans Administration loans so that the calculations are not left to the lenders.
“With federal programs and inclusive practices and policies, America can turn the narrative of black homeownership into a positive one,” Alston said. “But the time to act is now.”
For print or broadcast interviews with NAREB President Pope or NAREB Vice President Felton, please contact Michael Frisby at [email protected] or 202-625-4328.
ABOUT THE NATIONAL ASSOCIATION OF REAL ESTATE BROKERS
NAREB was established in 1947 to ensure the right to equal housing opportunity regardless of race, creed or color. NAREB has advocated for legislation and supported or initiated legal challenges that ensure fair housing, sustainable homeownership, and access to credit for Black Americans. Simultaneously, NAREB advocates and promotes access to business opportunities for Black real estate professionals in each of the real estate disciplines.
Michael K. Frisby
Frisby & Associates
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