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A way to home ownership for minorities
Angela Glover Blackwell
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TEXT OF COMMENTARY
Kai Ryssdal: We've been taking some time on the broadcast this week to explore the economic challenges facing African Americans. Today, the housing market. Even though the Great Recession of 2008-2009 and the real-estate crash that went along with it are fading, slowly, in the rear view mirror, African-Americans are still at a greater disadvantage than the rest of the population.
Commentator Angela Glover Blackwell says that's in part because of how they were able to get into the housing market in the first place.
Angela Glover Blackwell: Compared to whites, blacks and Latinos were about two-and-a-half times more likely to receive high-cost, high-interest, subprime loans. Nearly half of all home loans in poor communities of color were subprime. It's not really a surprise that that led to lots of foreclosures.
And there's a snowball effect. Each foreclosure brings down the price of every other house on the block.
Add insult to injury: investors from outside the community are gobbling up the vacant homes. Take the minority community of North Minneapolis. Local people want to buy these homes and renovate them, but they just can't compete against outside investors who pay cash -- sometimes buying properties sight unseen at auctions. So, we're back to square one, or maybe even square zero.
The nation needs a sustainable way to make home ownership work for the people who have been shut out for generations. Low-cost, low-interest government loans and first-time home buyer plans already exist. They're a good start. But what else?
We need to help local nonprofits buy and rehab foreclosed homes. That'll keep entire neighborhoods from becoming run down. Then, these houses should be sold with stipulations that keep them affordable from owner to owner for decades. Such efforts are underway in cities like Oakland, Calif., Duluth, Minn., and Dover, Del.
But it's a Consumer Financial Protection Agency that would be the best way to both deal with the scale of the current challenge and lay the groundwork for more sustainable home ownership growth for people of color.
How?
Mainly, by ensuring that loans are explained in clear, understandable language and applicants get the best rates they qualify for. If the agency can do this, it will help level the playing field.
By 2050, people of color will be the majority in America. Helping that majority become a stable middle class will require broader, more sustainable home ownership opportunities. That's a dream to believe in.
RYSSDAL: Angela Glover Blackwell is the founder and Chief Operating Officer of PolicyLink in Washington D.C.
Home ownership should not be a guaranteed right, backed by government programs. The lesson of the current crisis is that borrowers need to save before they buy.
We as African Americans should tighten our belts and save at least 20% of the home price. This does take sacrifice and time, but that is true of every worthwhile dream.
What is affordable housing anyway? If a house is expensive then it wont be bought. Why should the government have to step in & subsidize housing regardless if its for a minority or not? Not everyone should OWN a house. Renting is just as good.
Ms. Glover Blackwell's proposal is an extremely expensive way to provide affordable housing to a select few. If the same amount of money is used for Section 8-like rent voucher program, it will provide affordable housing to more people with more serious needs. I agree that affordable housing is a serious issue, but this is one of the least cost effective way of achieving it.
I am a grant writer for affordable housing programs (as well as for homeless housing).
Few people understand that true affordable housing programs are NOT part of this problem. Real affordable housing programs are tightly regulated (yes they are!), and the foreclosure rate in these programs are near ZERO. This is because purchasers were heavily vetted, were not allowed to purchase a home they couldn't afford, received hours and hours of counseling (ever get that from a bank?), received a sufficient subsidy to purchase the home, and were only permitted to get a mortgage they could afford. And if there was a problem, the non-profit who distribute the grants were there to help.
This problem is from the SOB's who wrote up false applications, promising buyers all was well. The buyers in many - but not all - of these cases trusted the "person across the table". And none of loan officers (again) went to jail. I say "again" because I also did appraisal work for the RTC, so I have seen all of this before.
What is proposed in the piece is doable, but some will abuse it, as always. Jail time might help cut down on that a bit.
"Nearly half of all home loans in poor communities of color were subprime."
So? I'll wager half of all home loans in poor communities of PastyWhite-Americans were subprime as well.
And they were just as culpable for signing up for something they couldn't afford.
It's not the government's job to help the citizenry achieve their dreams. Not all dreams are meant to be.
"Compared to whites, blacks and Latinos were about two-and-a-half times more likely to receive high-cost, high-interest, subprime loans."
The conditions surrounding approval for any type of home loan has nothing to do with race. Loans are approved or declined based on financial standings, such as income and payment history. If an individual could only be approved for a high-cost, high-interest, subprime loan, perhaps they should not have agreed to recieving that loan in the first place.
I believe the quote "By 2050, people of color will be the majority in America. Helping that majority become a stable middle class" points out one of the roots of the problem. I had only the number of children that I can support, and help to become "stable middle class" citizens. Perhaps "people of color" should work toward having successful children, rather than having many of them.
