Mortgage data shows aspiring Black homeowners face uphill battle

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Aspiring Black homebuyers get denied mortgage loans in Philadelphia more frequently than their white counterparts, according to a report released this month.

Why it matters: Philadelphia has a long history of people of color, particularly Black people, being excluded from the mortgage market, tracing back to redlining in the 1930s.

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Between the lines: Residents who live in majority non-white and lower income neighborhoods have higher denial rates compared to white borrowers, according to Philadelphia’s Home Mortgage Disclosure Act data gathered by the Reinvestment Fund.

  • Black borrowers tend to get government-issued loans, which are usually more expensive than the conventional loans that require more money upfront.

  • But even then, Black applicants’ denial rate for a government loan in 2020 was 11.9%, compared to 6.9% for white applicants.

Zoom in: Cash transactions largely from investors dominate the housing market in large swaths of North and West Philadelphia.

The intrigue: Even when Black applicants have higher incomes than their white counterparts, they get denied more.

  • Black applicants with incomes over $57,000 were denied more frequently than white applicants with incomes less than $57,000 for both conventional mortgages and government-insured mortgages.

What they’re saying: “The report is a lot of bad news for aspiring Black homeowners, and when you think of using homeownership to close the racial wealth gap, it’s not good,” said Michael Froehlich, a legal aid lawyer for homeowners at Community Legal Services.

  • Ira Goldstein, the president of policy solutions at the Reinvestment Fund, acknowledged other factors like lower credit scores and less generational wealth among people of color. But he said “there remains some discrimination in the mortgage market.”

What to watch: The city’s $400 million Neighborhood Preservation Initiative plans to give $14.5 million to Philly First Home, a program that has helped nearly 3,000 first-time homebuyers, many of whom are people of color.

  • The program, which provides up to $10,000 in homebuyer’s assistance, shut down in September 2020 after it ran out of money.

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