Nation’s wealth gap worsens
Charlene Crowell | 5/10/2019, 6 a.m.
“While the media coverage of the tax package and the public statements of the bill’s backers did not explicitly state that it would directly contribute to increasing the racial wealth divide, this was the impact, intended or otherwise.”
With the majority of black households renting today instead of owning their homes, escalating rental prices diminish, if not remove, the ability for many consumers of color to save for a home down payment. As reported by CBS News earlier this year, the national average monthly cost of fair market rent in 2018 was $1,405.
Recent research by the National Low-Income Housing Coalition on housing affordability found that more than 8 million Americans spend half or more of their incomes on housing, including more than 30 percent of black people and 28 percent of Hispanics.
Homeownership, according to the Center for Responsible Lending, remains a solid building block to gain family wealth. But with an increasing number of households paying more than a third of their income for rent, the ability to save for a home down payment is seriously weakened.
CRL’s proposed remedy in recent testimony before the Senate Banking Committee is to strengthen affordable housing in both homeownership and rentals. To increase greater access to mortgages, CRL further advocates low down payment loans.
“The nation’s housing finance system must ensure access to safe and affordable mortgage loans for all creditworthy borrowers, including low- to moderate-income families and communities of color,” noted Nikitra Bailey, an executive vice president at CRL. “The lower down payment programs available through FHA and VA provide an entry into homeownership and wealth-building for many average Americans.
“Government-backed loans cannot be the only sources of credit for low-wealth families; they deserve access to cheaper conventional mortgages,” Ms. Bailey added. “Year after year, the annual Home Mortgage Disclosure Act data reveals how consumers of color, including upper-income black and Latinx households, are disproportionately dependent on mortgages that come with higher costs. Our nation’s fair lending and housing finance laws require that the private mortgage market provide access for low-wealth families. We need additional resources for rental housing to address the affordability crisis that many working families face.”
There’s really no point in continuing to do the same thing while expecting a different result. When the status quo just isn’t working, change must be given a chance.
The writer is deputy director of communications for the Center for Responsible Lending.