Portrait of a young couple holding their chalkboard with the words “our first home” written across it
One of the most significant banks in America is offering a helping hand to Latinx and Black homeowners in the recently revived real-estate market. The BAC’s new “Community Affordable loan Solution” will be shown in select cities by Bank of America for Black and Hispanic/Latino residents. In 917 metropolitan areas, housing wealth increased from $15.9 trillion to $24.1 billion over ten years. According to Brookings Institute, homeownership is the most valuable asset that can be used to generate wealth.
What You Need to Know:
Black homeownership is currently at 45%, while white homeownership stands at 72%. CultureBanx reports that Black and Hispanic homeowners are not enjoying the same real estate gains as other demographics. This is due to home prices increasing so fast that families of Color are being priced out of their communities. The ‘Community Affordable loan Solution’ is an option that can make a big difference. There is no minimum credit score/mortgage insurance, and eligibility for home buyers is determined by income.
LendingTree TREE recently reported that the mortgage denial rate of Black borrowers was twice that of the general population. Black homeownership would match white homeownership by increasing Black wealth by nearly $40,000, bridging racial wealth inequalities by 30%. According to Elliott and Abacus Wealth Partners reports, the average white family will have $2,782,727, while the average Black family’s wealth will be $789164. This is an astounding 70% difference.
Housing Wealth Reimagined
As African Americans struggle to pay rising rent costs, home prices, student loan debt, coronavirus economic inequality, and marry later in their lives, they are excluded from generational wealth-building. A 2018 financial services company Legal & General study found that 43% of those under 35 had help from their parents or relatives when buying a home. However, this is not always possible for future Black and Hispanic homeowners.
Not all U.S. banks are taking the homeownership pledge. The third-great bank in the US by assets, Wells Fargo ( ), restricts Black and Hispanic homeownership. It rejects refinance requests from Black homeowners while approving nearly three-quarters of applications submitted by white applicants. An analysis by Bloomberg found that Wells Fargo had the lowest approval rates of major lenders for refinancing Black and Hispanic homeowners, at 47% and 53%, respectively. Although Wells Fargo did not dispute Bloomberg’s findings, it said that they are more selective than other lenders and take the same approach with all potential borrowers.
Black communities have houses worth half of those in white neighborhoods. This perpetuates the inequality that hinders People of Color from building stability and economic security. This is due to federal and state policies preventing Black/Latinx households from having access to financial resources when needed.