Mortgage data shows aspiring black homeowners facing an uphill battle
Aspiring black buyers are denied mortgage loans in Philadelphia more frequently than their white counterparts, according to a report released this month.
- And if they do manage to secure a mortgage, they compete with cash buyers – mostly investors – in their neighborhoods.
Why is this important: Philadelphia has a long history of people of color, especially blacks, excluded from the mortgage market, dating back to the redlining in the 1930s.
- Anti-discrimination laws like the Fair Housing Act of 1968 have helped to make progress, but disparities persist.
Between the lines: Residents who live in predominantly non-white, low-income neighborhoods have higher refusal rates than white borrowers, according to Philadelphia’s Home Mortgage Disclosure Act data collected by the Reinvestment Fund.
- Black borrowers tend to get government-issued loans, which are generally more expensive than conventional loans which require more money upfront.
- But even then, the refusal rate for black applicants for a government loan in 2020 was 11.9%, compared to 6.9% for white applicants.
Enlarge: Cash transactions largely from investors dominate the housing market in large areas of North and West Philadelphia.
- These are areas with large populations of black and Hispanic non-white people.
The plot: Even when black applicants have higher incomes than their white counterparts, they are more denied.
- Black applicants with incomes above $ 57,000 were turned down more often than white applicants with incomes below $ 57,000 for conventional mortgages and government-insured mortgages.
What they say : “The report is a lot of bad news for aspiring black homeowners, and when you think about using property to bridge the racial wealth gap, that’s not good,” said Michael Froehlich, legal aid attorney. for owners at Community Legal Services.
- Ira Goldstein, president of policy solutions at the Reinvestment Fund, recognized other factors such as lower credit scores and lower generational wealth among people of color. But he said “there is still some discrimination in the mortgage market.”
What to watch: The city’s $ 400 million neighborhood preservation initiative plans to donate $ 14.5 million to Philly First Home, a program that has helped nearly 3,000 first-time homebuyers, many of whom are individuals colored.
- The program, which provides up to $ 10,000 in assistance to homebuyers, was shut down in September 2020 after running out of money.