Homeownership Opportunities for Black Americans
Introduction: Welcome to the Homeownership InsightsPodcast, your leading mortgage podcast, sponsored by Fairway IndependentMortgage Corporation. Listen as experts from across the country share knowledgeto help homebuyers and homeowners make the best decisions in theirhomeownership journey. Our next podcast begins right now.
Casey Morris: Welcomeback to the Homeownership Insights podcast. I'm Casey Morris, and today I'mtalking with Tai Christensen, who is the chief diversity and public relationsofficer for the social enterprise Arrive Home, and we are talking about areally important topic. Obviously, it's February, which means that it's BlackHistory Month. And in honor of that, we wanted to dedicate an episode to thecritically important topic of Black homeownership in the U.S., which, ofcourse, is an important topic all year, not just in February, but we wanted totake this opportunity to really spotlight this topic. So, thank you so much forbeing here.
Tai Christensen: Thanksfor having me.
Casey Morris: Me. So just to dive right in, you know, I had been reading, according to the Pew Charitable Trust, the homeownership gap between black and white Americans in 2022 was 45.3% to 75 – I’m sorry, 74.6%. And that's a larger gap than there was in the 1960s. What do you see as the key reasons that are driving this gap?
Tai Christensen: Well, it's interesting Pew has it as high as 45% because some of the data that has come out this year has shown it only between 42% and 44%. So I'm slightly encouraged to hear that it's up to almost 45. But let us remember that that is a lower homeownership rate than our parents enjoyed. And so, this is very perplexing and troubling for the Black community in general.
A lot of things contribute to the depressed rates of Blackhomeownership. And we've got modern day redlining, income gaps between Blackand whites, credit score gaps between Black and whites. But moreover,educationally, in the Black community, we are not taught about homeownershipfrom a young age because most of our grandparents and parents have not beenhomeowners.
And so, this is information that we are not given aschildren. And so, it's important for us as a community to start to turn thetide, talking with our kids about homeownership, how it's possible, and for usourselves to model homeownership.
You know, I'm a fifth-generation homeowner. Homeownershipgoes back five generations, as I said, in my family. So, my great-great-greatgrandfather was the first homeowner in our family. And when he died in 1902, heowned 50 acres of land and he left a home for each one of his eight children.And so, homeownership has always been exceedingly important to me and myfamily. And I have been doing everything I can in my professional capacity tobring that message to our Black community at large.
Casey Morris: Andon that education topic, because that is so important, and I think if you don'tsee that modeled or no one's talking to you about it, then it's not going to beon your radar. But, you know, and I'm sure we'll talk about this later, homeownershipis so crucial to wealth building in the U.S., so it just exacerbates the gap. So,in terms of education, what do you see as being the biggest need and what mightthat look like in a really positive and effective way? Like you mentioned,talking to children even about homeownership. So where do you see this startingand what would that look like ideally?
Tai Christensen: Well,clearly it starts in the home. Right? But if your parents and grandparents haven’tmodeled that for you, where do you go to get information?
Interestingly enough, a lot of congregations in the Blackcommunity – pastors, priests, bishops – are starting to talk abouthomeownership to their congressional members because they want this communityto increase homeownership numbers so we can increase our wealth as a generalpopulation.
I heard a lot of great things about tick tock. There's allkinds of real estate agents and loan officers on TikTok, spreading the messageabout homeownership, trying to really break it down to small pieces that can bereceived by people that don't really know a lot about the process.
You know, my husband and I have bought four homes togetherand I've been in the industry for over 20 years. And even our last home that webuilt and bought together, I was even confused and perplexed and frustrated bythe process. And again, I've been in the industry 20 years. This is my fourthhome. So just imagine someone that comes from a generational renting family. Itis a lot of information and it is exceedingly overwhelming. But there are greatwebsites for first-time homebuyers.
Downpaymentresource.org is another great website wherepeople can go and get information that's easily received in smaller chunks tostart learning about the process from a granular level and increasing theirknowledge slowly over time.
Casey Morris: Doyou have any thoughts on how lenders can participate in this and how they canmake a point of reaching potential Black homebuyers and really making themessage accessible? Because it is overwhelming. Even when you know a little bitabout the process, it's like there's so many things to think about. There's somany terms, so many decisions to make that it's like if you have no backgroundin it at all, it's very hard to feel confident that you're making the rightchoice.
Tai Christensen: Oh,yeah. I mean, I was an underwriter for many, many years of my my career. And so,when we're building a house a couple of years ago and I was so frustrated, I'mthinking, what is wrong with me? Like, I know what's going on. I know all aboutAUS, why am I so, why am I so feeling emotional about the process right now?Right? It's a very emotional process.
And a lot of times people don't set you up for thatexpectation, specifically if you're a first-time homebuyer and you're eitherlosing bids to people that are offering more money, or maybe your underwritercomes back with some questions about your qualifying income. It's verytriggering specifically to people in minority communities because we have experiencedso much financial trauma over the generations, and we have a distrust with thelending industry and the banking industry as a whole.
The Black community is one of the largest demographics thatare what's called unbanked. That means they don't put their money intraditional banking establishments. So first and foremost, to your question, Iwould say that lenders need to do a great job of outreach. What does outreachlook like to the community? Well, let's just say how many Black loan officers doyou have working for you? How many Black faces do you have that can go intothese communities and talk to people on a Black-to-Black level where weunderstand what you're saying, and you can also break it down for us in a waythat maybe your white counterparts don't know to do? So that would be first andforemost.
What does your what does your website look like? Are youreflecting images that are culturally inclusive? Right? Do you have Blackfaces? Do you have Brown faces? Do you have blended family? Right? Your staff,again, to that point, if you can't see it, then how can you be it?
You know, if you don't if you don't have any experience inthe Black community, how are you going to do great outreach? What are you doingto build outreach in the community? Are you hosting public events? Are youhosting barbecues or picnics? Are you having flyers and material that arereflective of the communities that you want to serve? These are all little,small things that most lenders can do to start increasing their brand awarenessin communities of color.
Casey Morris: Andyou also mentioned redlining, which I wanted to talk to you about. So, I hadread that even in 2021 and 2022, banks are still being accused of redlining.They're being fined for it. There are stories of discrimination in homeappraisals, and obviously both of those things are illegal. So, what can Blackhomeowners do to vet lenders and other real estate professionals before theyapply with them or agree to work with them to ensure that they are getting fairrepresentation and that they can feel confident that the person they're workingwith really has their best interests at heart and is really going to bat forthem?
Tai Christensen: Specificallyfor Black and Brown community members. I really like to recommend starting witha real estate professional that's from your demographic.
I don't know if your listeners are familiar with the NationalAssociation of Real Estate Brokers. It's the oldest Black, predominantly Black,real estate association, and they have all Black realtists -- they call them realtists,instead of Realtors. And they work within our Black community and partner withtheir Black consumers to provide them information in a way that is trusting andthat they can go ahead and create that loyalty between the consumer before theconsumer even outreaches to a lender.
More oftentimes, if you're working with a Black real estateprofessional, they're going to have a corresponding Black loan officer or Blacklending group that you can work with that is very familiar with lending to ourcommunity. In the Hispanic community, NAHREP, the National Association ofHispanic Real Estate Professionals, that's another great resource. There’s NAMMBA,that’s N-A-M-M-B-A, National Association of Minority Mortgage Bankers ofAmerica, another great resource for people of color to go to and outreach topeople that look, sound and feel like them and begin to create that trust.
Secondly, once you do pick your real estate professional, ifyou have a bank that you're interested in working with or a lender you'reinterested in working with, go to their website. See if they have a culturalinclusion page or DEI platform page that talks about their company culture,their outreach to communities, the demographics of communities they want toserve.
Do they partner with real estate professionals that aredemographically, racially, demographically important to the community? Right?Do they have loan officers that are your same racial demographic? There'snothing wrong with picking up the phone, calling and asking. And when you getthat Black real estate loan officer, ask them, how many Black families havethey helped? How many Black loans have they closed in the last year? What'stheir outreach to the Black community? And if they don't have the answers thatyou're liking to hear, move on. You know, there are there are multiple waysthat you can engage in the homeownership buying opportunity and partner withpeople that are your same racial demographic. You do have to do a little bit ofgroundwork. But lucky for all of us, Google is here these days, and it mayactually be very, very helpful in these situations.
Casey Morris: Absolutely.Great. Those are great tips. And then kind of going back to something that youwere talking about a few minutes ago, one of the factors that Pew cites for thehomeownership gap is that white homebuyers are more likely to have familyassistance when buying a home, at least in part because homeownership is soclosely linked to wealth creation.
So, if your family has a history of homeownership, thechances that there is money there to help you get into a home is a lot higherthan if your parents have never owned a home before. So, what are someresources or strategies that are available to Black homebuyers who may not havethe option of family financial assistance, but who are committed to buying ahome and are just looking for those resources to help them get the down paymentor the closing costs or whatever they need?
Tai Christensen: Yeah,indeed. It's so true. You know, I have a lot of friends that they were gifted adown payment to their first home from their parents when they either graduatedcollege or got married. And what a wonderful opportunity for them to step intohomeownership with that gift of a down payment and not have that burden.
That does two things. It enables you to get into a homefaster, which gives you the opportunity to enjoy whatever the interest ratesare in that current moment, not knowing if they're going to rise or fall. Andthen additionally, you get to begin equity creation far, far faster than ifyou're waiting 10, 15, 20 years to accrue a down payment. You get to enjoythose benefits almost immediately as you're stepping into these pivotal pointsin your life.
And so, it is a great blessing to those families that areable to pass down that generational wealth through equity and assist theirchildren with getting into homes.
Now, if you are from a family that does not enjoy these sameresources. What can you do? Well, obviously, down payment assistance is amajor, major help to getting over that roadblock of the down payment for mostof our Black families. I work for Arrive Home. We are a national down paymentassistance provider, and we work with a multitude of social enterprises toprovide that down payment to the Black community.
There are also many, many other state and local down paymentassistance programs. Some of them are in the form of a grant, which means it'sessentially free money that they are providing to you for you to be able to getinto that home.
The downside with most grant programs is they work on what'scalled a tranche pool. That means that there is a particular amount of moneythat has been allocated towards this one specific resource, which in this caseis down payment assistance. And once those moneys are gone, they have to waitfor the next tranche to fund them. So sometimes with grant opportunities, it isa little bit more difficult to acquire the funding just because it is limited.
But again, there are other down payment assistance resourcesout there. Again, Arrive Home, that don't work on that same way. Like I statedearlier, downpaymentresource.org is a great, great website and they provide youwith a list of all the down payment assistance providers in your area based onarea code and you can outreach to them directly.
I've recently heard many, many corporate organizations thatare starting to offer down payment assistance as part of their companystructure. They have pools of money that they've allocated towards employees.Now, a lot of these are based on how long you've worked in the company, youknow, the level that you are in, mid-management, upper management. If you aretaking advantage of tuition programs as well, sometimes they go hand in hand.But that could be a potentially a great resource as well for people that need downpayments to get into homes.
Casey Morris: That'sgreat. So yeah, there's a lot of, there are a lot of options out there. I thinknot a lot of people are aware of all of the down payment assistance that isavailable. And you do have to kind of look around for it, do some research. Butonce you connect with a good loan officer, too, they should be able to help youand make some recommendations and kind of set you on that path it's that'ssomething that you need.
Tai Christensen: Oh,absolutely. And not just loan officers. Many, many real estate professionalsalso have really great relationships with down payment assistance resources.They have great relationships with city and council and county level downpayment assistance as well. So, it just depends. But most of your real estateprofessionals, specifically if they have a nuance of working in minoritycommunities. They know a lot about the down payment assistance options that are available in your particular area.
Casey Morris: Great. And then the last question that I wanted to ask you is just given thathomeownership and home equity specifically are so fundamental to wealthbuilding for most people in the U.S., closing the homeownership gap obviously has serious implications for wealth creation opportunities in the Blackcommunity.
So, what steps would you recommend for homebuyers who, youknow, maybe they're feeling intimidated or they're discouraged by theirprevious experiences or by headlines about how difficult the market is? Whatcan they do to empower themselves to get into a position to buy a home? Whatare the first steps that you would recommend for them to take?
Tai Christensen: Yeah,this is a really, really great question because I know a lot of people getfrustrated and overwhelmed. Again, as you were discussing earlier, it is anexceedingly overwhelming decision to first decide to buy a home and then to go through the process. Right?
But initially, let's just talk about what you can do firstand foremost. First thing you can do is get an accurate copy of your creditreport. You need to know where you stand, what your FICO score is, so that whenyou're going in to speak with a loan officer, you are empowered with thatinformation.
If you pull your credit score and you find out that yourscore is a 525, you're not ready to have that conversation with a loan officeror a real estate professional at that point, simply because your FICO score isnot where you want it to be in order to buy a home. Yes, can you potentiallybuy a home with a 580 FICO score? Sure. There are programs out there that wouldallow you to do so, but the interest rate you're going to be charged would bequite a bit higher than if you were able to improve your score.
So, if you've got a score that you feel is substantialenough, my recommendation would be if you've got a 620 or above, then you'reprobably ready to start looking into it.
And number two would be, what is your savings look like? Youknow, even if you're going to utilize down payment assistance or utilizeclosing cost assistance, which is also available out there, in order to getinto your home, you still need reserves.
I've been in down payment assistance for over five years nowand it is shocking to me how many people do not utilize down payment assistanceas a tool because they want to use all the money they've saved to put down ontheir home. Now, while this is very admirable, let's just use round numbers. So,you've saved $20,000 to get into your home. You're going to put the $20,000down on your home. You've still got to move. You still have moving expenses,you still are going to have to buy things for your new home. You're still goingto want to go in there and paint and update it and make it your own.
Or moreover, what if you move in and then six months lateryour air conditioning unit goes out or your refrigerator breaks? Or my secondhome I bought two weeks later, the garage door fell off, like it justcollapsed. You know, these are all expenses that you're not really planning onincurring. And unfortunately, if you have depleted your savings, well, now weare in a very negative situation where we may be faced with the choice ofmaking our mortgage payment or paying for this expense to be fixed. And that's absolutely the last thing we want to do. We want to avoid that, if at allpossible. And so, do not deplete your savings whatever you do.
And then homebuyer education is a great resource for peoplethat are just coming in and starting the homebuying process. There are many,many HUD approved homebuying education courses and counselors that you cancontact for free. HUD has a list of them on their website. I believe theirwebsite is hud.gov, and you can go through and look for a counselor in your areathat you can partner with for free, and they can shepherd you on what you needto do in your own unique circumstance. And that might be credit counseling. Youmight be ready. They may say, okay, well, have you thought about using 1,2, 3resource to get you on your path?
And then again, finally, again, with a real estateprofessional partnering with that trusted real estate professional,specifically from a minority real estate professionals, either NAMMBA, NAHREP, NARAB,and then having that person help you find a loan officer that is going to meetwith you and be sensitive to your unique situation.
Casey Morris: Absolutely.And I just want to say on the credit piece, I know, you know, if people do havea lender in mind and I know that Fairway offers this, it's definitely worthtalking to them about if their credit score is low, you know, maybe it's notyou're not going to buy a house tomorrow. You're not going to qualify tomorrow.But if you can start that relationship, like I know that Fairways Creditool program, they will, a loan officer will actually work with them and say, okay,here's what we need to do. Let's create a plan so that maybe it is six months or a year later.
But now you've had somebody tell you this is exactly what topay off, this is exactly what we're going to do and put you in a much betterposition to qualify. So, it's worth talking to somebody early on and not feeling like I've got to figure this out myself, because when you find someone in the industry who you can trust, they can really walk you through it and get you to the place where you can buy a home.
Tai Christensen: And specifically in this current environment where the real estate market is moving a little bit slower, you know, in 2020 and 2021, I mean, it was rapid fire, all hands on deck. It was just go, go, go.
Well, the market’s depressed a little bit, not a lot, but enough that people typically have a little bit more time and care to spend with their borrower or consumer. So to your earlier point, indeed, if you do have a trusted loan officer, definitely use them as a resource. That's an extremely valuable resource. They can, again, tell you what to pay off, what to pay down, how much to save and how to utilize your finances to the best of your ability to really set you up for success.
Casey Morris: Yeah, definitely they can. And it's like, that's the person that you want to be talking to in addition to your real estate agent, because they're the ones who are walking you through the loan process. They know better than anyone what it's going to take to qualify. So, you want that insight. You don't have to be out by yourself trying to figure it out or guessing or making your own plan. It's like, go to the person who's going to oversee that loan file.
Tai Christensen: Absolutely.
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The information in thispodcast is distributed for educational purposes only. The information is notguaranteed to be accurate and may not entirely represent the opinions ofFairway Independent Mortgage Corporation.
Copyright©2022 Fairway IndependentMortgage Corporation. NMLS#2289. 4750 S. Biltmore Lane, Madison, WI 53718, 1-866-912-4800.All rights reserved. Fairway is not affiliated with any government agencies.This is not an offer to enter into an agreement. Not all customers willqualify. Information, rates and programs are subject to change without notice.All products are subject to credit and property approval. Other restrictionsand limitations may apply. Equal Housing Opportunity.
Fairway is required todisclose the following license information. AZ License #BK-0904162; Licensed bythe Department of Financial Protection and Innovation under the CaliforniaResidential Mortgage Lending Act, License No 41DBO-78367. Licensed by theDepartment of Financial Protection and Innovation under the CaliforniaFinancing Law, NMLS #2289. Loans made or arranged pursuant to a CaliforniaResidential Mortgage Lending Act License; Georgia Residential Mortgage Licensee#21158; For licensing information, go to www.nmlsconsumeraccess.org; MA Mortgage Broker and Lender License#MC2289; Licensed Nevada Mortgage Lender; Licensed by the NJ Department ofBanking and Insurance; Licensed Mortgage Banker-NYS Department of FinancialServices; Rhode Island Licensed Broker & Lender; Fairway IndependentMortgage Corporation NMLS ID #2289 (www.nmlsconsumeraccess.org).
The information in this podcast is distributed for educational purposes only. The information is not guaranteed to be accurate and may not entirely represent the opinions of Fairway Independent Mortgage Corporation.
Copyright©2022 Fairway Independent Mortgage Corporation. NMLS#2289. 4750 S. Biltmore Lane, Madison, WI 53718, 1-866-912-4800. All rights reserved. Fairway is not affiliated with any government agencies. This is not an offer to enter into an agreement. Not all customers will qualify. Information, rates and programs are subject to change without notice. All products are subject to credit and property approval. Other restrictions and limitations may apply. Equal Housing Opportunity.
Fairway is required to disclose the following license information. AZ License #BK-0904162; Licensed by the Department of Financial Protection and Innovation under the California Residential Mortgage Lending Act, License No 41DBO-78367. Licensed by the Department of Financial Protection and Innovation under the California Financing Law, NMLS #2289. Loans made or arranged pursuant to a California Residential Mortgage Lending Act License; Georgia Residential Mortgage Licensee #21158; For licensing information, go to www.nmlsconsumeraccess.org; MA Mortgage Broker and Lender License #MC2289; Licensed Nevada Mortgage Lender; Licensed by the NJ Department of Banking and Insurance; Licensed Mortgage Banker-NYS Department of Financial Services; Rhode Island Licensed Broker & Lender; Fairway Independent Mortgage Corporation NMLS ID #2289 (www.nmlsconsumeraccess.org).