Recently released loan data show improvements in Charlotte’s housing market. A senior HUD advisor told WCNC Charlotte “the will is here” to close the gap.
CHARLOTTE, N.C. – Most of Charlotte’s largest lenders reduced their mortgage denial disparity rates in 2020, according to a WCNC Charlotte analysis of the recently released Data from the Residential Mortgages Disclosure Law. However, the data shows that these lenders, on average, still turned down black applicants twice as often as their white counterparts last year.
A senior adviser to the new US Department of Housing and Urban Development The secretary told WCNC Charlotte that closing that gap is “a priority” for the Biden administration.
“I think some of the real work is here and this president has made a commitment,” senior adviser at HUD Housing Finance Alanna McCargo said. “The data shows us that there’s still a big divide when you look at mortgage lending along racial lines and it’s persisted, and it’s bigger today than it has been in the history of us looking at this data.”
why does it matter
Home ownership is widely considered to be one of the most important paths to wealth.
a recent Urban Institute Study reported in 2018 the ownership gap between whites and blacks “has reached 30.5 percentage points, its highest level in 50 years and an increase of 4.1 percentage points since 1960.” In addition, the study noted that it took more than a decade for black home ownership to begin to recover after the decline following the 2008 housing collapse.
The economic difficulties for some families created by the pandemic add to the problem.
“Keeping people in their homes is a very important part of closing the gap too,” McCargo said.
Charlotte’s biggest creditors denied black applicants two to three times more than whites in 2018, 2019
WCNC Charlotte’s exhaustive investigation to the problem earlier this year identified much higher mortgage denial rates for black applicants. Data showed lenders denied black applicants two to three times more often than white candidates.
These lenders cited a poor credit history and higher debt/income ratios, systemic racial barriers, as the main reasons for the denials.
“We’re talking about generations that got us where we are,” McCargo said. “It’s going to take a while to get out of this, but I’ll say the will is here.”
The latest data, analyzed by WCNC Charlotte, shows that most of Charlotte’s largest creditors closed the gap in 2020, but not enough.
‘Don’t try to do this alone’
Local teacher Sadia Vanager recently bought her first home, but getting to that point took years of preparation.
“I wanted to have a house when I was 35 and I’m 35, so I got it,” said the mother of three, smiling. “Teaching my children this is very important. I don’t want you to be like, ‘Mom is just making these things happen.’ They need to know that things require a lot of work. You have to be a steward of your money and your credit. It can definitely be done, but you will also have to work for it. “
If there’s one thing Vanager learned along the way, it’s that you need help from others. She received advice on establishing good credit and managing money, help securing payment assistance, and guidance from her realtor.
“I didn’t know anything about the process,” she said. “Don’t try to do this alone. It’s not easy, but if you have the right people on your side, it can be done.”
Fundamental changes along the way
President Joe Biden announced his plan to address racial discrimination and prejudice in the real estate market on June 1st.
McCargo said that the Biden administration’s recognition of the problem and the federal government’s role in these disparities is a step forward. She hopes the federal government can make the most of this moment and improve some of the ongoing efforts by organizations and banks.
“You see the willingness and the work to really make some fundamental changes,” she said. “The HUD has been very committed to this work since day one of this administration. I feel like the stars have lined up and we have a president and a secretary of the HUD and just one government that is recognizing that and really wanting to work on it. faster with that kind of focus than we would otherwise.”
McCargo said the HUD is reviewing its programs and policies in an effort to identify problems and find solutions, focusing on everything from the technology used to assess risk to reassessing how the industry views certain populations.
“The disparities you are pointing out are deeply rooted in the systems that actually support the mortgage and underwriting process,” McCargo told WCNC Charlotte. “The industry is largely built on automation. We see profound disparities arising from these algorithmic formulas.”
HMDA data show that black borrowers who have secured loans through the largest lenders in the Charlotte market pay, on average, slightly more in interest, the equivalent of $471 over the life of a $250,000 30-year mortgage. a recent Study by the National Association of Real Estate Brokers found that black homeowners pay even more annually in interest payments, $743, largely due to perceived risk factors.
“We need to level the playing field,” McCargo said. “That shouldn’t be the case. It shouldn’t cost more because you’re black to buy a house.”
the congress is attending
The House Financial Services Committee noticed the problem. Representative Alma Adams (D), NC-District 12, briefed committee members on WCNC Charlotte’s findings during a March hearing on the matter and recorded the WCNC Charlotte report in the registry.
“We need to push even harder,” said Rep. Adams. “We are working on it, we know it exists and we will try to do some things to fix it.”
Building generational wealth
Back in Sadia Vanager’s new home, she is benefiting from the efforts of an earlier generation. His grandmother, a Jamaican immigrant, shared her first home with Vanager. She also helped raise her children. The selfless love of Vanager’s role model is helping to build generational wealth today.
“In the future, later on, if anyone wants to own this house, it will always be here. When I’m a grandmother, my grandchildren can come play in the backyard,” Vanager said. “To be able to maybe one day take care of her and bring her back to my house and return the favor she has given me is very important.”