New Programs Needed to Address Decline in Black Homeownership in New York: Report
Black homeowners pay more than white residents when buying a home and face other financial challenges that have been exacerbated by the COVID-19 pandemic, according to a new report.
Black homeowners pay more than white residents when they buy a home in New York City and face other financial challenges that have been exacerbated by the COVID-19 pandemic, according to a new report.
The Center for NYC Neighborhoods surveyed dozens of homeowners, housing counselors, and program practitioners over the past year to understand and resolve some of the challenges of black homeownership, which has declined by 13 % in the city over the past two decades and has worsened under the pandemic, the group says. The findings of the report are part of the research of the Black Homeownership Project, an initiative founded by the Center to examine how the 2008 foreclosure crisis and systemic issues impacted black homeowners. Work on the investigation began in 2019, before the pandemic hit.
The new discoveries show that the average black city buyer pays $ 7,000 more in closing costs and higher interest rates than white buyers. The results saw this pattern of higher costs for conventional mortgages, where a buyer must have a certain percentage of a down payment and a good credit score to qualify, and with Federal Housing Administration (FHA ) – federally insured loans issued by approved lenders, where a buyer may qualify for a mortgage even with a lower credit score and down payment, but faces a higher interest rate and insurance on this loan. But the Center for NYC Neighborhoods says the racial gap cannot be explained by looking only at the type of loan.
“We know that people who use FHA loans are likely to pay more because by definition an FHA loan is more expensive. But we were surprised to see that the model has also been maintained with conventional loans, ”says Ivy Perez, head of policy and research for the group.
One of the reasons black homebuyers pay more in closing costs is usually due to lower credit scores or less down payment help, Perez explains. However, during their research, they found that these typical contributing factors weren’t always the case – some high-income homebuyers of color always paid more, according to Perez. But without access to the details of the loan application, the Center was unable to definitively determine whether discriminatory practices were involved or not.
“Maybe it could be as simple as a mortgage broker telling you to take an FHA loan, even if you qualify for a conventional loan, because you are a person of color and five people of color are coming from. ‘come up and have taken out FHA loans, and maybe you point them in that direction, “she said.” So we can’t explain why this is happening, but it is alarming and it is happening for all of these. different types of loans and not just where we expect to see it. “
Earlier findings from the Center for NYC Neighborhoods indicated that the number of black homeowners in New York City fell 13% over the past two decades due to a combination of existing systemic issues, the impact of the foreclosure crisis. 2008 and soaring prices.
Black homebuyers face other challenges: Of the dozens polled for the survey, around 80% said they had difficulty funding their home repairs and finding trustworthy contractors to maintain their homes. depending on the results.
The Center for NYC Neighborhoods used the research results to develop five recommended pilot programs that would address some of the challenges black homeowners face. The Center would like to see the creation of an Down Payment Assistance Navigator, a digital resource for potential buyers and pre-purchase advisors, which could help with the loan process and connect potential buyers to resources. existing lenders. Another suggested pilot project, called the Savings Accelerator, would be a Matching Savings Program to help potential and existing homeowners meet their fundraising goals.
The Center is also keen to address the challenges faced by many “mom and pop” homeowners, such as in South East Queens, where there are many single and two-family homes. They offer to help these small homeowners through an owner-lessor service, which would help connect homeowners with municipal agencies, trusted lenders and contractors for repairs and support, and provide them with support to preserve affordable rentals and tenant mediation.
Another recommendation from the program, called Generation 2 Estate Planning, would help black homeowners preserve their generational wealth by protecting their assets from deed theft, predatory loans, tax liens and other debts inherited through debts. estate planning and community engagement services. The Center also wants to create more opportunities for tenants to become homeowners through a program it calls Pathways to Tenant Purchase, which would support the creation of cooperatives and services that support the conversion of a rental property into a capital cooperative. limit.