The rate of Black homeownership in America – now at 41.1 percent, according to 2019 census numbers – is even lower than it was when the Fair Housing Act was signed into law 51 years ago on April 11, 1968.
This means Black homeownership is 32.1 percentage points lower than that of Whites, which stands at 73.2 percent. It also means Black homeownership is 6.3 percentage points lower than that of Latino-Americans, which stands at 47.4 percent.
These are just a few of the facts presented to a recent Congressional hearing by homeownership advocates. The hearing, held by the House Finance Committee’s Subcommittee on Housing, Community Development and Insurance, was the first modern day hearing of its kind — intended to discover the barriers to homeownership for people of color.
“Federal housing regulators and agencies have aggressively pursued lending practices and policies that make access to homeownership more challenging for Black Americans. It is against this backdrop that I give my testimony,” Jeff Hicks, president/CEO of the National Association of Black Real Estate Brokers (NAREB), testified to lawmakers at the hearing. “Our nation has a very complicated and checkered history with providing equal and equitable access to homeownership to Black Americans. At the end of World War II, when Black Americans sacrificed their lives for the cause of freedom, dignity and human rights, the United States federal government created an economic divide between Blacks and Whites.”
Hicks described how Black veterans and their families were “denied the multigenerational, enriching impact of home ownership and economic security that the G.I. Bill conferred on a majority of White veterans, their children, and their grandchildren.”
He concluded that the “unequal implementation of the G.I. Bill, along with federal government policies and practices at the Federal Housing Administration (FHA), including the redlining of Black neighborhoods, were leveled against Black veterans” while at the same time the government financed the construction of suburbs and provided subsidized mortgage financing for Whites-only. This scenario “set the stage for today’s wealth and homeownership gap statistics,” Hicks said.
The hearing, led by Housing Subcommittee Chair Rep. Lacy Clay (D-Mo.), marked the anniversary of the passage of the Fair Housing Act (FHA), signed into law one week after the April 4 assassination of Dr. Martin Luther King Jr.
President Lyndon B. Johnson described the road to the 1968 passage as a “long and stormy trip” after it failed three times. Together, the testimony of the 72-year-old NAREB — the oldest organization represented — and the string of witnesses at the 21st century congressional hearing, revealed that the storm is not nearly over.
“We have not simply failed to make progress; we are losing ground. And we cannot continue to go backward,” Alanna McCargo, vice president for Housing Finance Policy, Urban Institute, stressed the urgency of the moment.
The Urban Institute was founded by President Johnson in 1968 to focus on “the problems of America’s cities and their people and to inform social and economic policy interventions that would help fight the War on Poverty,” she described.
The witnesses gave facts and anecdotes describing why new legislation and homeownership policies are needed. Among the proposals:
The passage of The American Dream Down Payment Savings Plan, a proposal with bipartisan support, which would allow prospective homebuyers to save money in an authorized account, where the savings could grow and be removed for the specified purpose of a tax-free down payment for purchasing a home.
A fairer mortgage and underwriting process in which borrowers meet a minimum threshold for approval and all interest rates and costs are the same for everyone; regardless of race; including loan level equality, approval rates, pricing and terms for borrowers — without adjustments for neighborhoods, zip codes or census tracts.
Accountability for non-bank financial institutions such as the examination their lending practices to ensure fair, equitable, and non-discriminatory origination, pricing, and terms. This would also include greater accountability and modernization of the Community Reinvestment Act to eliminate loopholes that limit access to mortgage credit to existing and potential Black homeowners.
Overall promotion of homeownership as a High Priority for Public Policymakers.
Equal and equitable access to mainstream mortgage credit as prospective Black homeowners have been trapped in predatory mortgage schemes or by an absolute denial of access to home loans.
Historically unequal access to credit for people of color was repeated as a key problem during the hearing.
“Wide access to credit is critical for building family wealth, closing the racial wealth gap, and for the housing market overall, which in turn, contributes significantly to our overall economy,” Nikitra Bailey, executive vice president of the Center for Responsible Lending, told the Committee. “Today’s hearing is a good step toward acknowledging this history and presents the potential to create opportunities to address it.”
The other four witnesses were Joseph Nery, president, National Association of Hispanic Real Estate Professionals; Carmen Castro, managing housing counselor, Housing Initiative Partnership; Joanne Poole, liaison for the National Association of Realtors and Joel Griffith, research fellow, Financial Regulations, The Heritage Foundation.
Bi-partisan lawmakers on the subcommittee listened intently then fired questions and remarks.
When Rep. Al Green (D-Texas) asked the witnesses to raise their hands if they “believe that invidious discrimination has been a significant reason for the inability for African-Americans to achieve wealth in this country … to this very day,” all seven witnesses extended their hands into the air.
“I’m grateful that you’ve done this because we’ve been trying to build a record to let the world know that we still have discrimination,” Green said. “Our original sin was discrimination. To be more specific racism … institutionalized racism.”
Chairman Clay saw eye to eye with the witnesses.
“It is clear by the evidence in front of us that 51 years later, there is still much work to be done to promote and assure fair housing in America,” he said, adding that Congress must bear the responsibility to end the discrimination largely because of its failure to continue to make and maintain fair housing policies.
“Although many private actors were complicit, research has shown that the government played a significant role,” Clay said.
Rep. Maxine Waters, chair of the House Financial Services Committee, which oversees the Housing Subcommittee, pressed the lawmakers, saying many of the oppressive policies are still used by banks and are “taken for granted.”
Waters described interest rates that are so high that homeowners – paying both interest and principal – have faced foreclosure because they can no longer afford the loan. She also described banks that won’t do loan modifications until two payments are missed making it difficult to catch up on the payments.
“We need to scrub this market and all the rules and practices and come up with a laundry list of what we think needs to be taken out of the way,” Waters said.
The congressional hearing was held on launch day for NAREB’s 2019 Spring Policy Conference May 8. NAREB, founded to fight for civil rights in order to win economic justice for its members and the people they serve, has set a goal of at least two million new Black homeowners within five years. They view working with Congress as their next best hope.
“Together with Congress, we must overcome the discrimination that continues to limit Black homeownership,” Hicks said. “The reason for this “dismal reality,” as stated in NAREB’s most recent SHIBA (State of Housing in Black America) report, is “that Blacks have never enjoyed equal and equitable access to mainstream mortgage credit. Rather, Black families attempting to become homeowners have largely been trapped in a vicious cycle of predatory mortgage schemes or by an absolute denial of access to home loans…We need to vigorously renew the importance of homeownership to all families, regardless of their race or ethnicity.”