Why the Disparity in Homeownership? 1. Poor Financial Literacy There is a documented link between financial literacy and financial stability among African Americans. The lack of financial literacy finds its roots in slavery and unequal opportunities in education which is why Brown vs. Board of Education was passed by the Supreme Court. The unfortunate reality is that the legacy still lingers and requires outreach.
2. Legacy of Wage Disparity and Income Discrimination There is long-established research that documents the wage disparity and income discrimination between African Americans, whites, and other minorities. You cannot afford a home if you cannot make enough money. Wage disparity exists not because of job qualifications. It exists because of racism and being denied the opportunity to make more money.
3. Home Loan Discrimination Since the beginning of FHA/VA and the securitization of loans, African Americans have been victims of discrimination and redlining. They are denied at a significantly higher rate than whites for home loans. There have been numerous lawsuits filed and won by the attorney generals and many laws on the books because of racism in lending and real estate.
4. Limited Information and Outreach to African Americans The revenue and ROI associated with DPA and CCA loans are very limited and borrower-paid. Very few banks participate in the programs because of that, and very few, if any, spend money to advertise these programs in the media. In addition, there are even fewer opportunities sponsored by banks and nonbanks to educate African Americans about homeownership and mortgage programs because the costs to do so further diminishes their ROI. Unfortunately, many people have missed out on the benefits of homeownership due to social status or ethnic affiliations. Minority communities are behind the national A FRICAN AME RI CAN HO ME OW N E R S H IP IN ITIATIVE | PAG E 6
