By Thomas Sheffield
50 years ago, the Fair Housing Act was signed into law. It prohibits discrimination concerning the sale, rental and financing of housing based on race, religion, national origin and sex. Since then, home ownership rates are just over 40% for African Americans which is 30% behind the rate for whites. Home ownership is for many of us, is the biggest investment of our lives. It provides the first step for many of us when it comes to building wealth and closing the wealth gap. But people in the African American community have the highest incidents of high cost loans with banks and credit unions with assets above 10 billion dollars. There are many factors that effect this stat. However, if African Americans are just as qualified as other groups, the disparity may be because of discrimination.
Spring and summer months are the biggest time for people to buy new homes. Affordable housing is becoming harder and harder to find. The inventory for affordable housing is quite low and this drives the housing prices up. Banks and lenders may have decided they do not want to give an investment in an area based on geography. This is called redlining. It is a practice where a lender drew a red line around a community, based on the demographics of that community and made a decision they were not going to make loans there. This is done regardless of credit but because of a perceived risk of a borrower in the community and the lender may decide they do not want to take the risk. These loans will be for home loans, small business loans, credit cards or any investments in that community because of that perceived risk. But what happens when it comes to gentrification? The answer is the red line moves or changes colors. The name of the neighborhood or main street may change and now the bank sees this as a desirable place to live. The result is the price goes up.
So what can we do about it? There are three things we can do or tools we can use to ensure we are able to prepare for home ownership. First get your credit in order. Save money and pay monthly bills on time to show banks you take your finances seriously. Secondly, visit lendingpatternslite.com. This site will provide lending data to see your lenders lending history to certain demographics. You can then choose to do business with that lender. Finally, take advantage of down payment assistance programs from the state. THDA offers down payment assistance if you qualify and attend a class. For minorities, there are many obstacles we face when it comes to living the “American Dream”. But it is not impossible. There are ways we can overcome the obstacles and live long, healthy sustainable lives and leave a legacy for our children.
If these things inspire you, and you want to share your ideas, please feel free to contact me thomsustainableconsulting@gmail.com or you can follow me on Twitter @tcsheff