Lenders, GSEs must work together to support homeownership gains among African-Americans

September 11, 2017 | By

Mel Watt, Director of the Federal Housing Finance Agency, recently spoke about the importance of increasing homeownership rates among African-Americans at the 70th Annual Convention of the National Association of Real Estate Brokers (NAREB). “While homeownership is not for everyone – and we should all be advocating for African-Americans to diversify their investments beyond just investments in their homes – homeownership has long been a great way for our families to build wealth,” Watt told the group.

“Studies confirm that even after accounting for the severe adverse impact of the housing crisis, homeownership continues to be a powerful tool for building wealth in our communities,” he said.

Read more: Brokers Group Promoting Homeownership Among African-Americans

Rising Numbers

In 2015, the homeownership rate among black Americans was 41.9 percent, according to the Census Bureau.

Last year, NAREB launched “2 Million New Black Homeowners in 5 Years” to increase the number of African-Americans who own homes.

In support, Fannie Mae and NAREB promote the benefits of homeownership at outreach events throughout the country. The Annual Convention, for example, was kicked off with a very successful Community Outreach Day where more than 500 Atlanta area families were able to get their credit reports pulled and participate in homebuyer education workshops.

These and other efforts may be starting to pay off. Last year, the African-American homeownership rate rose to 42.2 percent. “We believe education about the value of homeownership as the best wealth building tool is beginning to take hold among black Americans. NAREB is cautiously optimistic that by expanding the accessibility of consumer-focused information, offered by trusted sources re-instills confidence among black Americans that homeownership is within their reach,” said Jeffrey Hicks, NAREB’s newly installed president.

An Industry Evolving

In his speech Watt credited the availability of 3 percent down mortgages as helping many borrowers overcome what they cite as a huge barrier to homeownership − saving for a down payment. Between 2015 and June 2017, the Enterprises purchased over 130,000 mortgages with a three percent down payment, and the program is continuing to grow. “The average loan amount has been about $180,000, and over 95 percent of the borrowers were first-time homebuyers,” Watt said.

Additional efforts are underway, he noted. Earlier this year, Fannie Mae announced several changes related to student loan debt. “These changes look to responsibly address the growing challenge that student loan debt poses for many young people and that certainly impacts their debt to income ratio,” said Watt.

Read more: Helping homeowners refinance and pay down student debt

Both Enterprises also are considering how to better verify income for self-employed applicants and people who take part in the “gig economy,” such as those who drive for Lyft or Uber. Other projects are focusing on how to grow a pipeline of mortgage-ready borrowers over the long term by helping individuals and families build their financial readiness.

“We will continue to work with the Enterprises on these and other ideas throughout the year, and I look forward to sharing more details as this process unfolds,” he told NAREB members.

 

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