Wells Fargo seeks to increase African-American homeownership
Wells Fargo & Company, the nation’s leading home loan lender, is taking action to address lower homeownership rates in the African-American community.
The company has announced a $60 billion lending commitment to create a least 250,000 African-American homeowners by 2027.
“Wells Fargo’s $60 billion lending goal can contribute to economic growth by making responsible homeownership possible for more African Americans in communities across the county,” Brad Blackwell, executive vice president and head of housing policy and homeownership growth strategies for Wells Fargo said in a news release.
“We are proud to be the first mortgage lender to make a public commitment to help increase African-American homeownership,” he said. “And, we are grateful for the support of key housing and civil rights organizations, who work alongside us to increase economic prosperity in our communities.”
Through the initiative, the company also seeks to increase the diversity of the Wells Fargo lending sales team.
“We are definitely assuring that we are mirroring our markets, which means having a diverse team to be able to do that,” said Chris Holloway, area sales manager, Wells Fargo Home Mortgage.
“We are actively recruiting qualified home mortgage consultants to sort of help drive this initiative,” he said. “We are trying to increase the awareness about the challenges that some of our communities are faced with around credit and down payment.”
Wells Fargo is supporting the effort to increase homeownership rates in the African-American community with $15 million to support a variety of initiatives that promote financial education and counseling during the next 10 years.
Joining Wells Fargo in the effort are the National Association of Real Estate Brokers, composed of African-American real estate professionals, which has also set a homeownership goal, and two of the nation’s influential civil rights organizations, the NAACP and the National Urban League.
The National Urban League provides home-buyer education and counseling through its network of affiliate offices across the country.
Wells Fargo officials are currently arranging meetings with the local affiliates of NAREB, the NAACP and the NUL.
The U.S. Census Bureau projects that 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.
“NAREB applauds Wells Fargo’s $60 billion loan 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, NAREB.
“NAREB welcomes their entry into the struggle to close the ever-widening wealth gap for Black Americans, and looks forward to having Wells Fargo as a partner in NAREB’s ‘2 Million New Black Homeowners in 5 Years’ program,” Cooper said. “Let us all work together and grow this initiative which represents a solid and meaningful start for more Black Americans to become homeowners and wealth-builders.”
Home Mortgage Disclosure Act data for Philadelphia analyzed by LendingPatterns, indicated that of the 16,174 loans made in 2014 where race was known, only 3,620, or 22.38 percent of those loans were granted to Black Americans; even though they represented 43.2 percent of the city’s population. Black Americans were denied mortgage loans at a rate of 47.32 percent compared to a denial rate of 21.61 percent for whites.
According to the NAREBs 2016 commissioned study, The State of Housing in Black America, housing finance industry barriers such as credit-scoring models, the lack of affordable housing inventory and economic constraints like unemployment and underemployment contribute to low homeownership among African Americans.
Barriers to homeownership in Black communities include the costs associated with accessing mortgage credit, limited funds for down payment and lender adverseness to extend credit to consumers with lower credit scores and smaller down payments.
The African-American lending commitment is the second initiative from the companys Housing Policy and Homeownership Growth Strategies Group, a Wells Fargo Home Lending team advancing homeownership for minorities, first-time homebuyers and low-to-moderate-income customers. In 2015, Wells Fargo announced an agreement with the National Association of Hispanic Real Estate Professionals to support their Hispanic Wealth Project.