The African-American community lost more than half its net worth as a result of the housing debacle and the ensuing economic crisis, according to a new report from the nation's black real estate community.
Perhaps even worse, says "The State of the U.S. Economy and Homeownership for African-Americans," the situation is far from over for the blacks, who are more likely to experience unemployment than any other race.
"Neither the job nor homeownership prospects have improved much for this population over the past few months and years," according to the report, which was written by James Carr and others for the
The report was released last week during the Congressional Black Caucus' 43rd annual legislative conference in Washington. NAREB is the African-American equivalent of the National Association of Realtors, and lead author Carr once worked for Fannie Mae.
Opening the meeting, NAREB president Donnell Spivey called it "unconscionable" that gains in the homeownership among African-Americans, which reached a 20-year high of 49% in 2004, have been "eroded" to just over 43% today. Spivey is the owner/broker of Exit Professional Realty in Ellicott City, Md.
Rep. Gregory Meeks, D-N.Y., said the report would be instrumental in his efforts to pass housing finance reform and job creation legislation. And Rep. Sheila Jackson Lee, D-Texas, called the report a "vital document" for black caucus members who want Uncle Sam to be a partner rather than an obstructionist. Meeks, who serves on the House Financial Services Committee, said the ownership loss is causing "intergenerational consequences" because "black wealth is more concentrated in homeownership than any other asset."
According to the report, access for mortgage credit is more challenging for African-Americans. "Loans backed by Fannie Mae and Freddie Mac are all but impossible for African-Americans to secure," it claims. "The typical credit score for (black) borrowers of loans insured by the GSEs are in the high 700s, while the typical downpayment requirements are near or at 20%."
And in that more than 70% of GSE loans were made for refinancing in 2012, it adds, the "overwhelming majority" of loans to African-Americans today are backed by the FHA, which is now more expensive than it has been in decades.
The report said the "one ray of light" in response to the housing crisis was the creation of the Consumer Financial Protection Bureau, which "hit the ground running" in policing unfair and deceptive mortgage lending. But despite its strengths, the CFPB has "a limited capacity to ensure access to affordable mortgage credit to traditionally underserved borrowers, including people or color."
The report calls for "immediate action" in restructuring the mortgage finance system to meet the credit needs of underserved borrowers as well as insure the adequate availability of affordable financing for rental properties.
Lew Sichelman is an independent journalist who has been covering the housing and mortgage markets for more than 40 years.
