Caitlin Young, Urban Wire: Blog of the Urban Institute
July 31, 2019
This blog summarizes information presented at a previous panel discussion hosted by the Urban Institute. That discussion painted a bleak picture of the state of black homeownership in the United States, beginning with the fact that black homeownership is now lower than “it was in 1968, when housing discrimination was legal” prior to passage of the Fair Housing Act. According to the author, the experts call for an increase in access to credit as an essential corrective measure.
The panel of experts described alternative methods to assess creditworthiness as one way to help more black borrowers achieve homeownership. For instance, rent payments could be considered in credit assessments—because African Americans are more likely to be renters than white Americans…
Similarly, payments on telecommunication and utility bills are mostly not reported to the credit bureaus, despite the ability of current credit scoring models to leverage this data. Credit standards have also tightened considerably since the 2008 crisis, resulting in prospective black homebuyers being left without financing options.
Going forward, lenders should consider implementing underwriting criteria that more fully and equitably assess an applicants’ homeowning potential.