ogc163
Superstar
By Nigel Chiwaya and Janell Ross
Aug. 3, 2020
Ebony Jones thought she was one of the lucky ones. Jones, a Black woman in her 30s, inherited a home her grandfather, a World War II veteran, had bought nearly seven decades earlier with the help of his GI Bill benefits.
But when Jones and her two children moved into the house in Compton, California, which was paid off almost 40 years ago, they soon discovered that sewage sometimes backed up in the living room and that the plumbing needed to be repaired. The distressing process of securing a home equity loan introduced Jones to an American reality.
Despite Jones' good credit score, low debt-to-income ratio, better-than-average income and several thousand dollars of savings, lenders who immediately expressed interest stopped or went quiet when they got to two questions.
What was her ZIP code? Answer: 90220. That's Compton, 29 percent Black, 68 percent Latino.
Was she married? Answer: No.
Federal law prohibits lenders from using the answers to those questions to determine a borrower's ability to repay a loan.
"When I initially apply for a loan online, without fail, I get no problem," said Jones, 37. "They bombard me with emails and letters. Then they see the property address or ask me if I'm married, and everything changes."
The United States is in the midst of a racial reckoning as protests that began in the wake of George Floyd's death in Minneapolis police custody, as well as high Black unemployment due to the coronavirus pandemic, have prompted some Americans to contemplate the ways institutionalized racism and discrimination have constrained Black lives for centuries.
Advocates, scholars and officials say one of the clearest examples of that ongoing discrimination exists in the housing market, where the gap in homeownership rates between Black and white Americans is wider than it was before the Civil Rights movement.
Seventy-six percent of white households owned their homes at the end of the second quarter of 2020, compared to just 47 percent of Black households, according to the Census Bureau. That 29-percentage-point gap, perpetuated by decades of housing and economic policies favorable toward white buyers and designed to exclude Black buyers, has only been exacerbated by the pandemic and before it the 2008 financial crisis. Homeownership is the prime driver of America's ongoing wealth gap.
"We have a housing market with different components, including rentals and purchases and financing and insurance, that is really built on a structure that was explicitly racist," said Debby Goldberg, vice president of housing policy and special projects at the National Fair Housing Alliance, a consortium of nonprofit anti-housing discrimination organizations. "It shouldn't be a surprise to anyone looking around to see how segregated we remain. To see this enormous homeownership gap. And hand in hand with that to see the enormous wealth gap that exists."
In Jones' case, being able to live reasonably required access to a home equity loan. Ultimately, just one bank, Navy Federal Credit Union, offered her a loan, but only after making her wait eight months — supposedly to see whether any additional heirs would lay claim to the house, she said — and with the condition that her boyfriend co-sign. Even then, the credit union offered her only $185,000. That's far less than $248,000, or up to 80 percent of the equity Jones had in the home after earlier repairs. That's what lenders typically allow a person with good credit to borrow.
Navy Federal declined to comment on Jones' case, citing its obligation to protect borrowers' privacy. The credit union is "committed to serving all of our members as a trusted financial partner," a Navy Federal spokesperson said by email.
The consequences of not owning a home or of becoming a homeowner later in life are enormous, experts say. It often leaves a family unable to reach other pillars of the American dream, like tapping into home equity to start a business, survive a job loss or a medical emergency or pay for a child's college education. It is part of the reason a higher percentage of Black households owe student loan debt than white households. And experts say not owning a home makes it harder for Black children to become adult homeowners.
"Black Americans are locked in a vicious cycle," said Andre M. Perry, a fellow in the Metropolitan Policy Program at the Brookings Institution who is author of "Know Your Price: Valuing Black Lives and Property in America's Black Cities." "It is the lack of wealth that is the first and most fundamental barrier to homeownership for Black people in this country."
America's housing gap ballooned after the New Deal, experts say, when the federal government rolled out a suite of programs to boost homeownership and construction-industry employment in the wake of the Great Depression. Many of the programs, such as the Federal Housing Administration, an agency that oversees federal backing of private mortgage loans, the introduction of the 30-year fixed-rate mortgage and a tax credit for those with mortgages, made buying a home much more affordable for white families.
But Black households were often left out of the homeownership boom because of redlining, a practice in which the Federal Housing Administration refused to back loans in areas that were occupied predominantly by people of color. Those areas, often lined or shaded red on agency maps, were considered too risky.
Other discriminatory policies also proliferated. In several cities, including Minneapolis, St. Louis, Seattle and Chicago, it wasn't uncommon to see housing deeds that forbade the sale of specific properties to people of color.
As a result, by 1950 only about a third of Black households owned their homes, compared to more than half of white households.
"Housing is a story about wealth. Access to housing is one of the ways to generate wealth," said Skylar Olsen, senior principal economist at Zillow, an online real estate information platform that regularly analyzes market trends. "Not having access to housing in the past because of redlining, that really, really impacted generations of wealth building."
The 1968 Fair Housing Act outlawed redlining. But experts say the barriers between Blacks and homeownership didn't evaporate with the law. A Northwestern University study of bias in the housing market published in January found that while overt forms of discrimination — a real estate agent who won't return a phone call or who will deny that a listing is available — have decreased over the past four decades, discrimination in the mortgage market showed little change from 1968 to 2016.
And Minneapolis, one of the cities where racially restrictive deeds were prominent during the early 20th century, to this day has the largest homeownership gap in the United States.
Aug. 3, 2020
Ebony Jones thought she was one of the lucky ones. Jones, a Black woman in her 30s, inherited a home her grandfather, a World War II veteran, had bought nearly seven decades earlier with the help of his GI Bill benefits.
But when Jones and her two children moved into the house in Compton, California, which was paid off almost 40 years ago, they soon discovered that sewage sometimes backed up in the living room and that the plumbing needed to be repaired. The distressing process of securing a home equity loan introduced Jones to an American reality.
Despite Jones' good credit score, low debt-to-income ratio, better-than-average income and several thousand dollars of savings, lenders who immediately expressed interest stopped or went quiet when they got to two questions.
What was her ZIP code? Answer: 90220. That's Compton, 29 percent Black, 68 percent Latino.
Was she married? Answer: No.
Federal law prohibits lenders from using the answers to those questions to determine a borrower's ability to repay a loan.
"When I initially apply for a loan online, without fail, I get no problem," said Jones, 37. "They bombard me with emails and letters. Then they see the property address or ask me if I'm married, and everything changes."
The United States is in the midst of a racial reckoning as protests that began in the wake of George Floyd's death in Minneapolis police custody, as well as high Black unemployment due to the coronavirus pandemic, have prompted some Americans to contemplate the ways institutionalized racism and discrimination have constrained Black lives for centuries.
Advocates, scholars and officials say one of the clearest examples of that ongoing discrimination exists in the housing market, where the gap in homeownership rates between Black and white Americans is wider than it was before the Civil Rights movement.
Seventy-six percent of white households owned their homes at the end of the second quarter of 2020, compared to just 47 percent of Black households, according to the Census Bureau. That 29-percentage-point gap, perpetuated by decades of housing and economic policies favorable toward white buyers and designed to exclude Black buyers, has only been exacerbated by the pandemic and before it the 2008 financial crisis. Homeownership is the prime driver of America's ongoing wealth gap.
"We have a housing market with different components, including rentals and purchases and financing and insurance, that is really built on a structure that was explicitly racist," said Debby Goldberg, vice president of housing policy and special projects at the National Fair Housing Alliance, a consortium of nonprofit anti-housing discrimination organizations. "It shouldn't be a surprise to anyone looking around to see how segregated we remain. To see this enormous homeownership gap. And hand in hand with that to see the enormous wealth gap that exists."
In Jones' case, being able to live reasonably required access to a home equity loan. Ultimately, just one bank, Navy Federal Credit Union, offered her a loan, but only after making her wait eight months — supposedly to see whether any additional heirs would lay claim to the house, she said — and with the condition that her boyfriend co-sign. Even then, the credit union offered her only $185,000. That's far less than $248,000, or up to 80 percent of the equity Jones had in the home after earlier repairs. That's what lenders typically allow a person with good credit to borrow.
Navy Federal declined to comment on Jones' case, citing its obligation to protect borrowers' privacy. The credit union is "committed to serving all of our members as a trusted financial partner," a Navy Federal spokesperson said by email.
The consequences of not owning a home or of becoming a homeowner later in life are enormous, experts say. It often leaves a family unable to reach other pillars of the American dream, like tapping into home equity to start a business, survive a job loss or a medical emergency or pay for a child's college education. It is part of the reason a higher percentage of Black households owe student loan debt than white households. And experts say not owning a home makes it harder for Black children to become adult homeowners.
"Black Americans are locked in a vicious cycle," said Andre M. Perry, a fellow in the Metropolitan Policy Program at the Brookings Institution who is author of "Know Your Price: Valuing Black Lives and Property in America's Black Cities." "It is the lack of wealth that is the first and most fundamental barrier to homeownership for Black people in this country."
America's housing gap ballooned after the New Deal, experts say, when the federal government rolled out a suite of programs to boost homeownership and construction-industry employment in the wake of the Great Depression. Many of the programs, such as the Federal Housing Administration, an agency that oversees federal backing of private mortgage loans, the introduction of the 30-year fixed-rate mortgage and a tax credit for those with mortgages, made buying a home much more affordable for white families.
But Black households were often left out of the homeownership boom because of redlining, a practice in which the Federal Housing Administration refused to back loans in areas that were occupied predominantly by people of color. Those areas, often lined or shaded red on agency maps, were considered too risky.
Other discriminatory policies also proliferated. In several cities, including Minneapolis, St. Louis, Seattle and Chicago, it wasn't uncommon to see housing deeds that forbade the sale of specific properties to people of color.
As a result, by 1950 only about a third of Black households owned their homes, compared to more than half of white households.
"Housing is a story about wealth. Access to housing is one of the ways to generate wealth," said Skylar Olsen, senior principal economist at Zillow, an online real estate information platform that regularly analyzes market trends. "Not having access to housing in the past because of redlining, that really, really impacted generations of wealth building."
The 1968 Fair Housing Act outlawed redlining. But experts say the barriers between Blacks and homeownership didn't evaporate with the law. A Northwestern University study of bias in the housing market published in January found that while overt forms of discrimination — a real estate agent who won't return a phone call or who will deny that a listing is available — have decreased over the past four decades, discrimination in the mortgage market showed little change from 1968 to 2016.
And Minneapolis, one of the cities where racially restrictive deeds were prominent during the early 20th century, to this day has the largest homeownership gap in the United States.