Wells Fargo & Company announced this week a $60 billion initiative to assist the African American community in turning the American dream of homeownership into a reality by 2027.
The initiative also includes $15 million to support a variety of projects that promote financial education and counseling over the next ten years.
Recently during a panel discussion at the Center for Civil and Human Rights regarding the initiative, Brad Blackwell, Executive Vice President of Housing Policy & Homeownership Growth Strategies for Wells Fargo Home Lending said his company believes homeownership for African Americans in the United States is too low.
“Homeownership has been declining since 2006 and is the lowest it has been since the 1960’s, with only 42 percent of African Americans owning homes and 72 percent of white families owning homes,” he added.
Several notable organizations and businesses have joined Wells Fargo in support of their effort to create 250,000 African American homeowners in the next ten years including the National Association of Real Estate Brokers (composed of African-American real estate professionals), the National Urban League and the NAACP.
“NAREB (National Association of Real Estate Brokers) applauds Wells Fargo’s $60 billion commitment. The bank is the first financial institution to acknowledge publicly Black Americans’ wealth-building potential which could be greatly improved through homeownership,” said Ron Cooper, President of NAREB. “If 2 million black people bought houses in the next five years, the American economy would do very well.”
The African American lending commitment is the second initiative from Wells Fargo. In 2015, the company also made an announcement to originate $125 million to help increase Hispanic homeownership in order to assist in the National Association of Hispanic Real Estate Professionals’ Hispanic Wealth Project, which seeks to triple Hispanic household wealth over the next decade.
According to the U.S. Census Bureau, by the year 2024, 75 percent of the expected 14 million new households (renters and owners) in the U.S. will be diverse.
African Americans are projected to represent 17 percent, or the third largest segment, of the new households.
According to NAREB’s 2016 commissioned study, “The State of Housing in Black America,” barriers to home ownership in black communities include the costs associated with accessing mortgage credit, credit-scoring models, the lack of affordable housing inventory and economic restraints like unemployment and under-employment, limited funds for down payment and lender averseness to extend credit to consumers with lower credit scores and smaller down payments.
NAREB concluded that if generations of African Americans were more exposed to long-term homeownership options then the myths that make some of us fearful of purchasing homes would no longer exist.
Anika Khan, Senior Economist for Wells Fargo Securities was also amongst the panelists and said that as a people, we must go beyond just receiving education on the ability to get a mortgage in order to become successful homeowners. Khan went on to mention that the median net worth of African Americans is more than $100,000 less than non-Hispanic whites.
“The biggest difference is that for them, $80,000 is in home equity,” Khan said. “It’s not even just education on the ability to get a mortgage, it is knowing how to appreciate the home, it’s knowing where to buy a home that will appreciate and that will add to your net worth, because you can buy a home in a bad neighborhood that will never appreciate so it’s knowing what house to buy and when to sell and all those other components.”
Cooper responded to Khan’s statement by making sure the audience understood that purchasing a home in a “bad” neighborhood as Khan mentioned does not necessarily mean purchasing a home in a predominantly black area.
“We need to go into our community and talk about homeownership and how that does build wealth,” Cooper said. “If we as people buy in good numbers, our neighborhood will appreciate; it’s this idea that it’s the neighborhood that makes the people when it’s the people who make the neighborhood. If we do better, we all do better.”
Also present during the discussion was Wade Henderson, President and CEO of The Leadership Conference on Civil and Human Rights who said it is the duty of civil rights lawyers as well as the African American community to educate one another about zoning and municipal policies that can also have an impact on black wealth when purchasing a home.
Other panelists included Cy Richardson, Senior Vice President, Economics and Housing Programs, National Urban League, and Martin Eakes, co-founder and CEO, Center for Responsible Lending.
Eakes said there are three things lenders consider when consumers apply for home loans; down payment amount, FICO scores and cash reserves that will be left after the loan is received.
During the discussion, Blackwell explained how Wells Fargo has designed a strategic framework that will assist the company in reaching African Americans that include:
Ensuring visibility and presence in the communities they serve
Providing the right products, services, policies, education and policies
Develop effective partnerships with key stakeholders, influencers, and organizations.
Developing and advocating for housing policy positions that increase access to homeownership.
Dedicating $15 million to support a variety of initiatives to educate and support and advance AA homeownershipIncreasing diversity of sales team
Wells Fargo offers a diverse set of projects and courses to assist with finances and home buying needs including yourFirstMortgage, that offers a down payment as low as three percent for fixed-rate loans as well as their partnership with Operation Hope, the financial-literacy group founded by John Hope Bryant of Atlanta.
According to Wells Fargo’s 2016 survey results with the Social Research and Corporate Reputation Specialists (IPSOS), 90 percent of African Americans say home ownership is a “dream come true,” 79 percent say it’s essential for building families and 51percent are considering buying a home in the next two years.
Let’s hope this new initiative with Wells Fargo will do some good in the African American community.
For more information or to speak with a Wells Fargo mortgage consultant, call 1-877-937-9357.