Mortgaging While Black

I read a CNBC article that stated the following: 

“When it comes to applying for a mortgage, 18% of Black borrowers are denied on average compared to a 9% rejection rate for the overall population. LendingTree’s analysis is based on data from the 2020 Home Mortgage Disclosure Act.” Aug 27, 2022. https://www.cnbc.com/amp/2022/08/27/black-borrowers-mortgage-denial-rate-twice-that-of-overall-population.html [cnbc.com] 

   So, what does this information mean exactly? It means that black borrowers are attempting to obtain mortgages for home ownership, and at some point during the process, they are either not pre approved or they are not able to close their loan. This means ultimately that black borrowers are not able to purchase the home that they are interested in. This could be a residential home or an investment home to generate income. That’s almost 50% more than our counterparts being denied a mortgage for homeownership. This means our counterparts own more homes even within the black neighborhoods. So, as we are being denied our mortgages, we are being forced into possibly covering someone else’s mortgage because let’s face it, we still need somewhere to live. 

  The real question is …why the hell is that an accurate statement in 2022? Historically black people have been oppressed on many levels and have overcome some of them. However, the basic methods to build wealth are still hidden from us because of our melanin. Why? Who’s at fault? Simply put we are!  

   We are blindly heading into financial institutions with hopes of  a dream house with little to no understanding of the process and how to ride the wave of the mortgage industry like our counterparts. It’s time to change that! Yes, we can dream and have goals, but we need to know to execute them.  

  

We can no longer walk into banks to fill out applications and  sign contracts without understanding what the hell we are signing up for. Do we even understand why we are being rejected? Do we go back to the drawing board and figure out a better plan? I can safely say many people just give up; I know I have in the past.  

“But there are solutions, and Black homebuyers shouldn’t lose faith that they’ll never be able to become homeowners,” -Jacob Channel, senior economist at LendingTree.   

Lose faith? That statement shows how patronizing it is for Black people to move forward. As if we are children trying to ride a bike… “don’t give up little Brandon keep trying”. Meanwhile, the industry is booming and creating generational wealth for everyone else while it’s inflating rental prices for struggling non-homeowners. Our counterparts have been collecting wealth from dirt for many years now for some reason minorities are not able to do the same thing. A lot of us make good money, so where is the disconnect? Some would argue that the issue is credit, and I agree, that it is a huge disadvantage for a lot of people when it comes to homeownership. 

  Let me be clear, Black people own homes, own businesses and we make money but too many of us don’t because we lack knowledge!  

   I know not everyone wants to be a homeowner, but there are a lot of people who do desire to be homeowners and they are being declined without fully understanding why. In some cases, they don’t even know how to correct what they are being declined for. 

  How do we get around something like this? We need to arm ourselves with education. We need to understand the process, and we need to move forward with taking that leap of faith of trying to obtain home ownership. Having the necessary tools and resources knowing about down payment assistance programs, and knowing how to apply for homes within your reach is important. 

   So where do we start? I think the mortgage professionals that understand the process owe it to the public, to the minority community, to educate them. It is as simple as starting with defining mortgage terms, explaining what debt to income ratio means, being able to explain what interest rates are; an adjustable interest rate versus a fixed rate, and just giving the necessary information so that we can make sound decisions. We then also need to look at our income and credit. Those are the biggest factors when it comes to being a homeowner, what can we afford?  

    A lot of people have the mentality that paying $2500 a month in rent, when they only make $15 an hour, that they can afford $2500 a month in housing expenses. That is simply not true. The ability to repay your mortgage goes way beyond those calculations! The reality is your $2500 rent is something that you currently cannot afford you’re barely surviving. I think, especially within the minority groups, we have the “I can pay for it, I can afford it” mentality .When in reality, that’s not how it works. Affording a housing payment is based on federal guidelines and specific program overlays that require a specific ratio. We don’t want you to max out your checks trying to pay one bill in life. No one has one bill. We want you to be able to afford your housing payment and the luxury of living, not just surviving.  

   I strongly and wholeheartedly believe that before we can change the narrative and change the perspective of other ethnicities, we first must build our communities with the resources and knowledge so that we can fight a fair fight. There are many federal regulations are in place to protect us from discrimination, yet it still exists. If it exists, it is our responsibility to make sure that we can overcome the obstacles as a unit.  

  The data and statistics show that black homeowners are behind the curve. It shows that financial institutions for whatever reason, weather it’s discriminatory or not. This information should inspire us to do better and motivate our communities to move forward with understanding how the mortgage industry works. The information is at our fingertips. The market is at our fingertips, starting by watching news reports and following current interest rates, increases and decreases in the market.  

  Financial institutions are filled with different people with different beliefs. This is everyday life. The biases of people exist, especially in today’s society where freedom of speech is the number one flex without really worrying about consequences. People are human and sometimes they allow their flesh to get the best of them, despite the policies and procedures put into place to protect everyone. We can’t change the way everyone thinks but we can somehow figure out how we can learn how to play the game.  

   Let’s figure it the hell out! Don’t be afraid to ask questions or do your own research.Don’t be afraid to take a class or a course. Go to a friend and say “Hey you have great credit. Could you show me how you did that?” If you’ve figured it out , don’t withhold information because you’re afraid that the next person is going to make it further in life than you are. We can build our block and  take back our block, but at the end of the day, it’s going to require some work. 

   I have faith that we can get through this if we work together. I also feel like it’s my due diligence to provide as much information as possible and I’m going to do just that one homeowner at a time.