U.S. Housing and Urban Development Secretary Marcia L. Fudge on Thursday released the following statement on the National Association of Realtors®’ (NAR) 2022 Snapshot of Race and Home Buying in America report, which examines current racial disparities in the housing market.
“Today, homeownership is the principal source of wealth creation for most American households. Unfortunately, NAR’s report confirms that Black Americans are being locked out of homeownership opportunities at an even higher rate than a decade ago. It is critical that we bridge the racial homeownership gap with intentional solutions that recognize both the persistent history of discrimination and inequity, and the current crisis of housing affordability. We must recognize that Black Americans are more likely to carry student loan debt and have higher balances. Black Americans are also more likely to experience discrimination in the housing market.
“At HUD, we are meeting this challenge in a number of ways including taking steps to make homeownership more accessible to those with student loan debt; tackling bias in the homebuying process; and making it clear that certain Special Purpose Credit Programs are lawful and are an important tool to help expand access to credit and homeownership for those who have experienced systemic and generational exclusion. The Biden-Harris Administration and HUD will continue to prioritize opening the door to homeownership for families—especially those who have been systemically kept out over generations.”
According to NAR’s report, the U.S. homeownership rate climbed to 65.5% in 2020, up 1.3% from 2019 and the largest annual increase on record. More Americans own homes now than during any year following the Great Recession (65.4% homeownership rate in 2010). However, Black Americans continue to face significant obstacles along the path to homeownership. The homeownership rate for Black Americans – 43.4% – trails behind that of a decade ago (44.2% in 2010). Conversely, White Americans (72.1%), Asian Americans (61.7%) and Hispanic Americans (51.1%) all achieved decade long highs in homeownership in 2020, with the rate for Hispanic Americans setting a record and reaching above 50% for the first time.
Under Secretary Fudge, HUD has taken a number of proactive steps to redress the impact of past discriminatory practices and implement new policies to help more families—particularly African Americans—realize the dream of homeownership:
Removed Barriers to Homeownership for Those with Student Loan Debt. The Federal Housing Administration (FHA) updated its policy on student loan monthly payment calculations to remove barriers and provide more access to affordable single-family FHA-insured mortgage financing for creditworthy individuals with student loan debt, which has disproportionate impact on communities of color. The updates removed the previous requirement that lenders calculate a borrower’s student loan monthly payment of one percent of the outstanding student loan balance for student loans that are not fully amortizing. The new policy bases the monthly payment on the actual student loan payment, more closely aligning FHA policies with industry standards.
Advanced Fair Housing. More than 50 years since the Fair Housing Act’s passage, access to wealth through homeownership remains persistently unequal. In his first week in office, President Biden issued a memorandum directing HUD to address discrimination in the housing market. Secretary Fudge is taking critical steps towards realizing the President’s directive. HUD has published both its proposed rule on countering housing practices with discriminatory effects and its interim final rule on the legal duty to Affirmatively Further Fair Housing in the Federal Register. These rules will align federal enforcement practice with the Fair Housing Act’s broad remedial purpose to end discrimination in housing. Together, they will provide the legal framework for HUD to require private and public entities alike to rethink established practices that contribute to or perpetuate systemic inequality in housing and recognize and address longstanding fair housing issues in our communities.
Improved Homebuyer Assistance Programs. The President’s FY2022 HUD budget proposal makes clear that housing is foundational to building a strong, more secure America. The FY2022 HUD budget includes a $100 million set-aside for Secretary Fudge’s new initiative, the FirstHOME Homebuyer Assistance initiative, which provides funding to States and insular areas – unincorporated territories of the United States – to support sustainable homeownership.
Took Action to Address Racial Bias in the Housing Market. On June 1st, 2021 in Tulsa, President Biden announced that Secretary Fudge would lead a first-of-its-kind interagency initiative to address inequity in home appraisals. Along with Domestic Policy Advisor Ambassador Susan Rice, Secretary Fudge launched the first interagency task force on Property Appraisal and Valuation Equity (PAVE). The effort is utilizing, quickly, the many levers at the federal government’s disposal to root out discrimination in the appraisal and homebuying process. A 2018 Brookings study found that homes in majority-Black neighborhoods are often valued at tens of thousands of dollars less than comparable homes in similar-but majority-White-communities. And the crisis is worsening: a recent study found that the gap between the appraised value of homes in predominantly White neighborhoods compared to comparable homes in predominantly Black and Latino neighborhoods nearly doubled between 1980 and 2015.
Called for Tools to Expand Access to Credit and Homeownership. As Congress recognized in specifically authorizing Special Purpose Credit Programs (SPCPs) in an amendment to the Equal Credit Opportunity Act (ECOA) in 1976, SPCPs can be an important tool to help expand access to credit and homeownership for those who have experienced systemic and generational exclusion. Despite SPCPs’ being specifically authorized under ECOA, for too long banks have expressed reticence to establish these programs, some citing concerns that the Fair Housing Act somehow bars what ECOA explicitly permits. HUD issued a legal opinion making it clear that certain SPCPs that are lawful under ECOA generally are not barred by the Fair Housing Act. Secretary Fudge has also convened partner agencies to discuss the furtherance of homeownership and credit availability for communities who have long been denied such opportunities.
Awarded Grants to Support Free and Low-Cost Housing Counseling. In January, HUD awarded $51.4 million in housing counseling grants to 177 HUD-approved housing counseling agencies and intermediary organizations. This included funding to HUD-approved housing counseling agencies that are partnering with Historically Black College and Universities (HBCUs), Hispanic Serving Institutions (HSIs), or other Minority Serving Institutions (MSIs). The funding will support housing counseling agencies in their work to help families make more informed housing choices. The awards also include funding to further training and education to attract and retain more diverse housing counseling professionals.
Awarded Grants to Support Asset Building Among HUD-Assisted Families. Recently, HUD awarded $101 million to 677 public housing authorities (PHAs) to support efforts to help residents living in public housing and those participating in the Department’s Housing Choice Voucher Program to meet their financial goals through HUD’s Family Self-Sufficiency (FSS) Program. Participants in the program have an interest-bearing escrow account established for them. Upon successful graduation, the household receives the escrow funds to advance their personal financial goals, including improving their credit score or making a down payment on a home.