In an encouraging series of moves for the housing market, several different banks have introduced programs in recent months that aim to make it easier for Black Americans to buy their first home.
It’s an important development given the level of racial inequality in the U.S., with Blacks notably lagging behind other groups when it comes to homeownership rates.
“Housing advocates are viewing the programs as efforts to repair the damage banks caused over the years, including the subprime mortgage lending in the early 2000s - risky high-interest mortgages to Americans with scuffed or limited credit - that contributed to the Great Recession and the low Black homeownership rate,” The Washington Post reported.
Some of the offerings include thousands of dollars in closing cost credits, while others offer down payment assistance, lower interest loans and expansions of affordable housing opportunities in underserved areas, the Post reported.
For example JPMorgan Chase recently pledged a massive $30 billion that will be used to address the racial wealth gap in the U.S. Among other things, the bank will use that money to provide loans, make investments and spend on philanthropy over the next five years. The bulk of the money will go towards housing, it said. Altogether, it has promised $8 billion will go towards funding 40,000 mortgages for Black and Latino home buyers, with another $4 billion for refinancing that aims to help around 20,000 Black and Latino borrowers reduce their monthly mortgage payments.
“Systemic racism is a tragic part of America’s history,” Jamie Dimon, JPMorgan Chase's CEO, said in a statement. “We can do more and do better to break down systems that have propagated racism and widespread economic inequality, especially for Black and Latinx people.”
Bank of America and Wells Fargo meanwhile, said they’re expanding existing programs that aim to help boost minority homeownership.
The homeownership rate for Blacks is currently close to historic lows. In the first quarter of this year, just 44% of Black families owned their home, versus 73.7% of white families, according to data from the Census Bureau. The homeownership gap between Blacks and whites has unfortunately widened since the Great Recession, while during the same period, homeownership rates for whites, Latinos and Asian Americans have all increased.
The recent moves by banks follow years of criticism of their policies. Banks have been accused of fostering inequality by denying mortgages to Black applicants at higher rates than other groups, using the now illegal practice of “redlining”. Moreover, Black homeowners suffered almost double the number of foreclosures following the Great Recession.
“Banks are showing a real financial commitment to making change, and there’s no question that it will help enormously,” Sonya Mays, CEO and founder of the nonprofit housing development firm Develop Detroit, told the Post. “But the pledges have to be followed up with structural changes in the banking industry if we’re going to tackle long-standing discrimination faced by people of color.”
National Association of Real Estate Brokers Executive Director Antoine Thompson said that adding more diversity to the banking and real estate industries would help to increase homeownership rates among Black Americans.
"The fact is we need more Black loan officers, more Black underwriters and appraisers, to effectively deal with the issues of bias in the industry," Thompson told the Post.