African Americans Return to the Home Buying Market

African Americans are returning to the homebuying marketplace in numbers greater than projected a year ago by the National Association of Real Estate Brokers (NAREB).

The 2017 State of Housing in Black America (SHIBA) report, found that Black home ownership rose from its near 50-year low of 41.3 percent in the third quarter of 2016 to above 42 percent in the first two quarters of 2017, according to Home Mortgage Disclosure Act (HMDA) data.

“While economic recovery is still out of reach for far too many Black Americans, NAREB sees a break in the storm.  Black consumers are slowly regaining confidence in the marketplace, but institutional obstacles remain,” said Jeffrey Hicks, President of NAREB formed in 1947 to ensure equal and fair access by Black Americans to own homes. This year’s report, co-authored by James H. Carr, Michela Zonta, and Steven P. Hornburg takes aim at traditional systemic barriers and economically-driven displacement trends that continue to impede Black home ownership.

It is a sign that NAREB’s target for Black home ownership is not only achievable, but also is a reasonable expectation as the organization pushes to change the narrative to one that encourages Black Americans to build wealth and economic sustainability through home ownership.

To achieve that goal, the SHIBA report indicates that key federal policy changes are needed to strike down unequal access to credit, to eliminate unfair fees and cost equivalences of mortgage products, and to enhance mortgage loan disposition.

Given the fact that nearly 30 percent of denials for loans to Blacks are due to credit history, the delay in making changes to government-sponsored enterprises’ (GSEs) credit-scoring policy until 2019, is unnecessary and unfair, according to the report.

While recent data shows signs of improvement in the homeownership arena, the report noted, the forces that sustain the Black-White disparity are enhanced by federal policies. Blacks remain on the sidelines of the recovery of the nation’s cities, the report states. The forces that are fueling the rebirth of the cities have exacerbated rather than closed the racial wealth gap, the report also finds.

What is evolving is a stubborn form of economic segregation that will keep the gap in homeownership wide and daunting. Unless federal housing policy is modified to encourage, instead of discourage lending to Blacks, there will be an “overwhelming lack of access to affordable credit as well as to more effectively manage the large stock of distressed assets to promote homeownership, particularly in communities that have historically lacked adequate homeownership opportunities,” according to the report.

The bright signs reflect modifications in federal policy, including the creation of new mortgage products by Fannie Mae and Freddie Mac; capping of the Loan Level Price Adjustment (LLPA) fees for these new mortgages; changing required debt-to-income ratios from 45 to 50 percent, and the GSEs’ incorporation of trended data in their underwriting platforms. NAREB labeled these changes as accomplishments that are the result of two years of diligent advocacy by NAREB and other stakeholders seeking equality in mortgage access.

Still, NAREB is pushing for elimination of the barriers to homeownership and at the same time, urging Black Americans to take advantage of educational resources and homeownership counseling to ensure homeownership sustainability in the communities of their choice.

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