AFRICANGLOBE – The US Senate is currently considering legislation that would turn back the clock on opportunities for Black Americans to own a home in America. The Corker-Warner legislation would transfer the securitization role that historically has been performed by Fannie Mae and Freddie Mac to a new government agency, the Federal Mortgage Insurance Corporation (FMIC).
However, in this transfer, gone would be the requirement that Fannie and Freddie or its successors provide credit to all communities through government affordable housing mandates that encouraged lenders to originate mortgages for low and moderate income families – many of whom were Black.
The nation needs public policies that expand homeownership opportunities, not ones that broaden the wealth gap between Blacks and Whites. Because of affordable housing goals and vigorous enforcement of the Community Reinvestment Act (“CRA”) from 1996 to 2004, homeownership for Blacks steadily increased from 44.1 percent to a peak of 49.1 percent in 2004. Since then, however, homeownership for Blacks dropped to 45.4 in 2010, similar to the level in 1998.
Moreover, without vigorous enforcement of affordable housing goals and CRA, Black homeownership rates are projected to fall to 40%. Not surprisingly, ComplianceTech, a mortgage data analyst company, found that between 2004 and 2009, Blacks received 62 percent fewer mortgages than Whites; and Whites were twice as likely as Blacks to be approved for prime mortgages with the lowest interest rates.
Legislation, such as the Corker-Warner bill, will speed the decline by reducing the widespread availability of government support for housing finance. These facts alone underscore that this legislation will increase wealth disparity between Blacks and Whites. According to Moody’s Analytics, mortgage interest rates would increase about 20% from this legislation, pushing many Black families out of the market. More importantly, the nation’s top economists say that 30-year fixed-rate mortgages would drop from 75% of the market to about 10%, turning the country back to the early 1900’s when only the rich and privileged could purchase homes.
Working families must stand together to stop or change this legislation. This battle is about far more than simply owning the place where you live. For decades, the American Dream of homeownership has been a driving force for parents looking to make a better life for their families. Owning a home has been the foundation of our society, of our communities. Homeownership has stabilized communities, with studies even showing that the higher the home ownership rate in neighborhoods, the better children do in school and the lower the crime rate.
Equity from home ownership has been a wealth creator, one of few available for Black families. Over the years, home equity has helped send children to college, provided start-up capital for thousands of new businesses and allowed financial security for retirements.
Just as important, homeownership is a symbol of progress. Everyone remembers the first time they walked into their new home and the first time their children saw it. We want our children to experience that joy as parents, and for their children to experience that joy.
Our communities cannot tolerate legislation that creates new costly barriers to homeownership. Ohio has many progressive leaders in the House and Senate, who understand the importance of homeownership to our communities. We call on their leadership in stopping legislation like the Corker-Warner bill that will turn back the clock, and put the American Dream of homeownership out of reach for many.
Tracy Maxwell Heard is the Democratic Leader of the House of Representatives for the 130th General Assembly of Ohio.