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Exploring the Low Black Homeownership Gap: Are Lenders and Banks Culpable?

Dr. Anthony O. Kellum

Dr. Anthony O. Kellum – President & CEO of Kellum Mortgage, LLC Advocate for Access to Credit, Speaker, Author NMLS # 1267030 NMLS #1567030 O: 313-263-6388 W: www.Kellumortgage.com

Homeownership is oftenhailed as the quintessential American dream, a symbol of financial stability,and a means to accumulate intergenerational wealth. However, this dream remainselusive for many Black Americans, as they grapple with a significantly lowerhomeownership rate compared to their white counterparts. This disparity inhomeownership rates, along with the undervaluation of homes in predominantlyBlack neighborhoods, has far-reaching consequences, contributing to the racialwealth gap.

The Disparity inHomeownership Rates

The statistics arestark: as of the latest available data, Black Americans maintain ahomeownership rate of only 46.4%, while their white counterparts enjoy a muchhigher rate at 75.8%. This disparity raises critical questions for me about theunderlying causes, accountability, and potential solutions to this enduringissue. Are lenders and banks culpable for perpetuating this divide inhomeownership?

Historical Context: ALegacy of Systemic Racism

To understand the rootcauses of the low Black homeownership gap, it is imperative to recognize thehistorical context of systemic racism in the United States. The racial wealthgap is not an isolated phenomenon but rather a product of deeply ingrained inequalitiesthat date back centuries. From the horrors of slavery to the Jim Crow era'ssegregation policies and the discriminatory practice of redlining, Blackcommunities have been systematically marginalized, economically disadvantaged,and deprived of opportunities for wealth accumulation.

The Role of Lenders andBanks

While systemic racismis the overarching cause of the low Black homeownership rate, lenders and bankshave played a significant role in perpetuating this disparity. Historically,Black individuals and families were subjected to discriminatory lending practices,known as redlining, which systematically denied them access to mortgage loansand homeownership opportunities.

Redlining was a policythat involved categorizing neighborhoods based on their racial composition andsystematically denying loans or offering them at higher interest rates to Blackapplicants in predominantly Black neighborhoods. This practice effectivelybarred Black families from purchasing homes in desirable areas, where propertyvalues appreciated over time. Although redlining was officially banned throughlegislation like the Fair Housing Act of 1968, its consequences continue toreverberate. Subsequent predatory lending practices, such as subprimemortgages, disproportionately affected Black borrowers and contributed to thehousing market crash of 2008. The aftermath of this crisis had a devastatingimpact on Black homeowners, leading to a loss of wealth and furtherexacerbating the homeownership gap.

Contemporary Challenges

Black applicants stillface hurdles in accessing mortgage loans on equitable terms. Studies have shownthat Black applicants are more likely to be denied mortgage loans, even whenthey have similar financial profiles to white applicants. Discriminatorylending practices, such as steering Black borrowers into higher-cost mortgageproducts, persist in various forms, perpetuating the racial disparity inhomeownership.

In Summary

The low Blackhomeownership gap is a complex issue deeply rooted in the historical legacy ofsystemic racism in America. While lenders and banks are not solely responsiblefor this disparity, they have played a substantial role in perpetuating it.Addressing this issue requires a multifaceted approach, including policyreforms, increased access to affordable housing, and enhanced enforcement offair lending practices. It is essential to acknowledge that progress has beenmade, but much work remains to be done to rectify the historical injustices andsystemic biases that continue to hinder Black Americans' access tohomeownership and the accumulation of wealth. Ultimately, achieving trueequality in homeownership and wealth will require a concerted effort from allsectors of society, including lenders, banks, policymakers, and the broadercommunity.

Property is Power! is a movement to promote home and community ownership.

Studies indicate homeownership leads to higher graduation rates, family wealth, and community involvement.