African-American home ownership rates may have recently fallen to historically low levels not seen since 2004; but some home builders and mortgage companies are still partnering with those who want to buy homes.
While white and African-American home ownership rates are at their lowest since the 1940’s (29.7 percentage points), some African American couples like Lauren and Brandon Oldham of Tulsa squirreled funds away, looked for friendly lenders, and encountered success. Last fall, the Oldhams moved into a three-bedroom, two-bath home that was built by Capital Homes of Tulsa, according to news reports.
“To transform a neighborhood, it takes a partnership approach, and it takes people who care,” said David Charney, the owner of Capital Homes, which has built more than 1,000 homes in the Tulsa area, including the home that the Oldhams recently bought in Tulsa. Charney said barriers to home ownership for African-Americans may reach back generations. But this is 2017. It’s time to rethink the game.
“If there are mechanisms to help provide down-payment assistance, assuming there is owner occupancy, society is ahead in my judgment if we let them earn and burn off that down-payment assistance maybe over a 5- or 10-year period, as long as they remain in the home and keep it in good repair,” Charney said, in a recent news report. “Then, two things happen. They begin to amass equity, and we have restored homeownership to neighborhoods that have largely become rental neighborhoods and don’t receive the same degree of care that they do from homeowners.”
Charney added, “The private sector can’t do that lifting alone. The numbers simply won’t work.”
African Americans who want to become homeowners, in other words, must help with the heavy lifting. This means a potential homeowner must squirrel away savings and strike up a partnership with multiple lenders including Wells Fargo which issued a recent statement that said Wells Fargo would help to create more than 250,000 new African-American homeowners in an effort to address declining homeownership.
Meanwhile, in Detroit, the mayor recently announced a financing program to make home-buying easier. Previously, banks couldn’t provide loans for more than a home’s appraised value, which wasn’t enough to cover needed repairs or renovations.
But, the Detroit Home Mortgage agreed to offer traditional first and second mortgages from five banks that loaned funds to home buyers in metro Detroit. This mortgage program helped many buy homes in the city. More important, this program eliminated the hurdle many potential homeowners of color face: home sale prices are higher than appraised values, which makes it difficult for people to get mortgages, no matter their income or credit score.
The point is after Detroit launched the new program between itself and potential homeowners, the partnership led to 3,000 homes being sold in Detroit in 2015, and only about 500 involved mortgages. Please review this program by going to www.detroithomemortgage.org
Another example of a successful partnership is in Jacksonville, where 32-year-old Natasha Jones recently bought her first home, a three-bedroom listed at $135,000. The single mother of three worked with a member of the nonprofit NeighborWorks America, which supports community development, to clear up her credit and save for a down payment on a Wells Fargo-financed loan.
Jones moved in and said in recent news reports, “I’m painting the kids’ walls. It’s ours.”
Another successful partnership between would-be minority homeowners, home builders, and lenders surfaced in Denver. Representatives from banks, government and foundations met in intense, closed-door meetings.
Months of investigation led the federal Comptroller of the Currency to ask for relief from tougher mortgage lending rules enacted after the housing crash. To learn more about how to buy a home for the first time in Denver, please go to: http://www.cohomesandloans.com/loan-options/denver-home-loan-programs/denver-first-time-home-buyer-programs/.
In short, focus on the raw facts. So, here are the hard, cold facts. Yes, potential home buyers of color run into a disproportionate number of hurdles and roadblocks. Black families nationwide who earn around $230,000 a year are more likely to be given a subprime loan than white families making about $32,000. Blacks however must do the research, squirrel away funds, strike up partnerships, and seek out better loans; even if they are targeted for bad loans.
In a nutshell, the key to becoming a successful homeowner is this: Do not form a partnership with the lender who will charge you the most. “High-risk lenders are not only more likely to provide high-cost loans overall, but are especially likely to do so for African-American and Hispanic borrowers,” economists Patrick Bayer, Fernando Ferreira, and Stephen L. Ross said in a February 2016 study titled, ‘What Drives Racial and Ethnic Differences in High Cost Mortgages? The Role of High Risk Lenders.
But, put that news aside. Let’s say you are trying to buy a home in well, Nashville. The rules that apply in Tulsa, Detroit, Jacksonville, and Denver apply to those who live in Nashville. In other words, squirrel away funds and strike up a positive partnership with local mortgage lenders.
Bolstered by $60 million in federal funding, the Tennessee Housing Development Agency recently expanded a program to help first-time homebuyers, allowing people buying in targeted neighborhoods slow to recover from the Great Recession.
The infusion of funds comes as Nashville’s supply of affordable housing has dwindled amid rampant gentrification from the city’s ongoing economic boom.
THDA Executive Director Ralph Perry said many people in Nashville want to own a home. But many potential homebuyers listen to hardship tales and assume a mortgage is out of reach. Perry said with the incentive program “homeownership opportunity is actually much closer at hand that you had imagined.”
By Rosaland Tyler