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LOCAL SPOTLIGHT: HOPE

HOPE is a Black- and women owned Community Development Financial Institution (CDFI) credit union, loan fund, and policy and advocacy organization. Since 1994, HOPE has worked to increase access to financial services, expand community infrastructure, and advocate for vulnerable populations in economically distressed areas throughout the Deep South. HOPE currently serves five states — Alabama, Arkansas, Louisiana, Mississippi and Tennessee — a region that is home to over a third of the nation’s persistent poverty counties. Of HOPE’s 38,000 member owners, 69% have household incomes below $45,000, eight out of 10 members are people of color, and nearly half did not have a bank account upon joining the institution.

Expanding Black Homeownership

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Over the last 22 years, HOPE has closed over 3,000 mortgages to homebuyers across its fivestate region. Importantly, HOPE’s mortgage program has achieved a high level of impact. In 2022, 9 out of 10 mortgage borrowers were people of color; 2 out of 3 were women and 8 out of 10 were first time-homebuyers (Figure 1a). Additionally, HOPE extended homeownership opportunities to mortgage borrowers with credit scores that were well below national levels (Figure 1b) with a charge off rate of less than 0.20%.

To achieve this level of impact, HOPE offers an in-house mortgage product, the Affordable Housing Program (AHP), designed to address systemic obstacles for potential homebuyers lacking a down payment. Through the AHP, mortgages are manually underwritten, and nontraditional sources of credit are considered in the underwriting process. The product also discounts deferred student debt, does not require mortgage insurance, and considers credit scores as low as 580. The AHP allows for a loan-to-value (LTV) of 100% - eliminating the need for a down payment. HOPE often pairs the AHP product with various down payment assistance programs to reduce barriers to homeownership. Down payment assistance programs are funded through philanthropy, bank partners and various units of government.

Homeownership And Mortgage Gaps In The Deep South

HOPE’s mortgage program responds to systemic gaps in the Deep South where 1 out of 2 Black households own a home in contrast to 3 out of 4 white households. Across the region, homeownership gaps by race persist in every state (Table 1).

A major factor contributing to the homeownership gap includes inequitable access to mortgage financing. Even controlling for income, Black borrowers are more likely to be denied mortgages. In the Deep South, Black borrowers experience higher mortgage denial rates than white borrowers at every income level (Figure 2).

Table 1: Homeownership Rates in the Deep South by Race

AR 45% 73%

LA 49% 78%

MS 54% 80%

TN 44% 74%

Deep South 49% 76%

Source: FDIC (2021). “National Survey of Unbanked and Underbanked Households”

After falling onto hard times financially, Annie Wallace relocated to Memphis to stay with a friend. She soon learned about HOPE and began working closely with the team to map out a path to get her credit back on track. “From day one, HOPE was awesome,” Wallace says. “They weren’t judgmental. They asked me what my goals were and I told them I wanted my own home.” Wallace followed the plan and eventually qualified for a mortgage through HOPE’s Affordable Housing Program, an in-house program that did not require a down payment. Once the mortgage closed, she purchased a modest two-bedroom house that she called her own. “Throughout this whole ordeal, HOPE reminded me not to give up on myself. I was growing and it was going to be better ahead.”

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