By CultureBanx Team
- Bank of America’s launches ‘Community Affordable Loan Solution’ to help 1st time Black and Hispanic homeowners
- Black homeownership currently stands at just 45%, compared with white homeownership at 72%
Black and Latinx homeowners are finally getting a lift from one of the nation’s largest banks in the newly revived real estate market. Bank of America’s new ‘Community Affordable Loan Solution’ will be available in certain cities for Black and Hispanic/Latino neighborhoods. Housing wealth has increased from $15.9 trillion in 2010 to $24.1 trillion over a 10-year period. Bank of America’s new program can start to eliminate the housing wealth gap since homeownership is typically the top asset through which wealth can be derived, according to the Brookings Institute.
Why This Matters: Black homeownership currently stands at just 45%, compared with white homeownership at 72%. Black and Hispanic households are not reaping the real estate gains felt by other demographics, due to home prices appreciating so much that families of Color are being out-priced out of their very own neighborhoods. This is why the ‘Community Affordable Loan Solution’ can be a game changer since there is no minimum credit score or mortgage insurance required and home buyer eligibility is based on income along with location.
Lending Tree found that A recent report from LendingTree found the mortgage denial rate for Black borrowers is twice that of the overall population. If Black homeownership matched white homeownership, Black wealth would increase by almost $40,000, bridging racial wealth inequality by about 30%. In 2064, the average white family will likely possess $2,782,727 in wealth while the average Black family wealth will be $789,164, according to a report by Elliott and Abacus Wealth Partners, that’s an astonishing 70% disparity.
African Americans are being shut out of generational wealth building as they tackle rising rent costs and home prices, disproportionate student loan debt, coronavirus economic inequities, and on average, getting married later in life, causing them to delay homeownership and wealth building capabilities. According to a 2018 study from financial services company Legal & General, they found 43% of people under 35 received help from parents or family members when purchasing a home, this is not always an option for future Black and Hispanic homeowners.
Not all U.S. banks are stepping up to the homeownership plate. Specifically, Wells Fargo (WFC -1.01%), the nation’s third largest bank by assets, is stifling Black and Hispanic homeownership by rejecting refinance applications sent in by Black homeowners, while approving almost three-quarters of those sent in by white applicants. A Bloomberg analysis found that Wells Fargo’s 47% and 53% approval rate gave it the worst record among major lenders when considering refinancing for Black and Hispanichomeowners.
Situational Awareness: Unfortunately, houses in Black communities are worth less than 50% of homes in white communities, further perpetuating the inequality that prevents People of Color from building stable economic security. All of this is the result of federal and state policies that continually prevent access to financial resources that would help, leaving fewer economic opportunities for Black/Latinx households to fall back on when a crisis hits.
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