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The National Urban League Wire
Published: Wed. Dec 31, 1969 at 7:00 pm | Updated: Thu. Oct 8, 2015 at 12:18 pm | Comments: 0
By Guest Blogger Audrey Washington, CEO – Washington Consulting Group
The July 2015 study by the Urban Institute states that the homeownership rate for African Americans will decrease over the coming years; which is cause for concern because historically homeownership has been the primary source for African Americans to accumulate wealth in the form of home equity and they already took a major hit in the economic crisis. Other studies show the widening gap between African Americans and other races in the areas of income and employment. Decreases in all of these areas show that African Americans are losing economically.
What’s Going On?
It is important to know the reasons why this is happening. Even more important is the need to develop realistic strategies that can increase and sustain homeownership in the African American community. These strategies must be two-fold – help existing African American homeowners retain ownership of their homes and increase the number of new African American homeowners.
Historically, it has been much more difficult for African Americans to purchase their own homes. In the early years, African Americans have held important but lower paying jobs and as a result, earning enough money for home purchase took much longer. Once they earned enough money there were still discriminatory obstacles such as redlining that impeded their ability to purchase a home. In the recent mortgage crisis, more African American homeowners lost their homes through foreclosure, because many obtained their mortgages through high cost, high interest rate subprime and predatory lenders. After foreclosure, it now becomes more difficult to purchase a home. There is also a lack of education and discussions in the African American community about money and finances. Other ethnic groups consistently discuss money and take steps toward wealth-building which leads to greater financial stability in their communities.
What’s Next?
Increasing and sustaining African American homeownership can be accomplished through community education and supported by government initiatives. Currently, there are government initiatives in place that offer 3% to 5% down payment options. However, the low down payment programs require mortgage insurance. Government initiatives could be developed to eliminate mortgage insurance or provide a 12-month grace period before borrowers are required to include mortgage insurance in their monthly payments. Once African Americans save enough for their down payments, many still struggle to save enough for their closing costs. More government programs are needed to assist with closing costs.
Good credit is still a major stumbling block for African Americans who desire homeownership. We need consistent homebuyer and financial education in the African American community especially around credit and debt. The starting point is having discussions that will encourage African Americans to engage in education and make lifestyle changes that will increase their credit scores and savings and reduce their debt.
Let’s begin talking about budgeting, establishing and maintaining good credit, and managing debt. We need to begin these discussions in our social circles, in the places we frequent regularly and the organizations that we are a part of – houses of worship, schools and universities, fraternities and sororities, beauty salons and barber shops. For over 10 years I have done a short presentation on credit, debt and foreclosure prevention during my family reunions. They are well received and I emphasize housing counseling.
For your next book club, consider selecting books like “Girl, Get Your Money Straight” and “Girl, Get Your Credit Straight” by Glinda Bridgforth or “Perfect Credit” and “Zero Debt” by Lynnette Khalfani-Cox. You could also start a monthly “Money Club” to discuss financial topics.
Many National Urban League affiliates have HUD-approved housing counseling programs and are positioned to lead the cause to educate and increase mortgage-readiness and sustainable homeownership with their certified housing counselors. Many studies have shown that default rates are greatly reduced when the homeowner receives pre-purchase counseling and homebuyer education. There are many ways to get good information and prepare for homeownership. Local Urban Leagues have homebuyer and financial education workshops and housing counseling in their local offices. There are also several quality homebuyer education courses and phone counseling available for those who can’t get to a local office or who otherwise prefer online learning. To find an HUD-approved Urban League housing counseling agency click here, and for a larger listing of HUD-approved housing counseling agencies around the country go to the HUD website.
Financial education for our children is important because they are the future homeowners. When a child is old enough to recognize the McDonald’s golden arches, they are old enough to learn about money. It has to be age appropriate, but they will learn if it is fun and consistent. There are many computer-based financial education programs for children. During community, family or faith-based events, consider offering family financial events – presenting financial information for children and adults. Engaging the children will lead to parent engagement.
We need to talk more and plan better. In our community, homes are lost when a parent dies, the heirs cannot afford the mortgage or the taxes and there is no life insurance policy in place to cover it. Homeownership is reduced when we don’t talk about the future. When a family loses their home, generational wealth is lost.
While government initiatives will support African American homeownership, community based homebuyer and financial education programs must be at the forefront. By working together at a grassroots level we can inform, motivate and lead African Americans to achieve and sustain homeownership.
The July 2015 study by the Urban Institute states that the homeownership rate for African Americans will decrease over the coming years; which is cause for concern because historically homeownership has been the primary source for African Americans to accumulate wealth in the form of home equity and they already took a major hit in the economic crisis. Other studies show the widening gap between African Americans and other races in the areas of income and employment. Decreases in all of these areas show that African Americans are losing economically.
What’s Going On?
It is important to know the reasons why this is happening. Even more important is the need to develop realistic strategies that can increase and sustain homeownership in the African American community. These strategies must be two-fold – help existing African American homeowners retain ownership of their homes and increase the number of new African American homeowners.
Historically, it has been much more difficult for African Americans to purchase their own homes. In the early years, African Americans have held important but lower paying jobs and as a result, earning enough money for home purchase took much longer. Once they earned enough money there were still discriminatory obstacles such as redlining that impeded their ability to purchase a home. In the recent mortgage crisis, more African American homeowners lost their homes through foreclosure, because many obtained their mortgages through high cost, high interest rate subprime and predatory lenders. After foreclosure, it now becomes more difficult to purchase a home. There is also a lack of education and discussions in the African American community about money and finances. Other ethnic groups consistently discuss money and take steps toward wealth-building which leads to greater financial stability in their communities.
What’s Next?
Increasing and sustaining African American homeownership can be accomplished through community education and supported by government initiatives. Currently, there are government initiatives in place that offer 3% to 5% down payment options. However, the low down payment programs require mortgage insurance. Government initiatives could be developed to eliminate mortgage insurance or provide a 12-month grace period before borrowers are required to include mortgage insurance in their monthly payments. Once African Americans save enough for their down payments, many still struggle to save enough for their closing costs. More government programs are needed to assist with closing costs.
Good credit is still a major stumbling block for African Americans who desire homeownership. We need consistent homebuyer and financial education in the African American community especially around credit and debt. The starting point is having discussions that will encourage African Americans to engage in education and make lifestyle changes that will increase their credit scores and savings and reduce their debt.
Let’s begin talking about budgeting, establishing and maintaining good credit, and managing debt. We need to begin these discussions in our social circles, in the places we frequent regularly and the organizations that we are a part of – houses of worship, schools and universities, fraternities and sororities, beauty salons and barber shops. For over 10 years I have done a short presentation on credit, debt and foreclosure prevention during my family reunions. They are well received and I emphasize housing counseling.
For your next book club, consider selecting books like “Girl, Get Your Money Straight” and “Girl, Get Your Credit Straight” by Glinda Bridgforth or “Perfect Credit” and “Zero Debt” by Lynnette Khalfani-Cox. You could also start a monthly “Money Club” to discuss financial topics.
Many National Urban League affiliates have HUD-approved housing counseling programs and are positioned to lead the cause to educate and increase mortgage-readiness and sustainable homeownership with their certified housing counselors. Many studies have shown that default rates are greatly reduced when the homeowner receives pre-purchase counseling and homebuyer education. There are many ways to get good information and prepare for homeownership. Local Urban Leagues have homebuyer and financial education workshops and housing counseling in their local offices. There are also several quality homebuyer education courses and phone counseling available for those who can’t get to a local office or who otherwise prefer online learning. To find an HUD-approved Urban League housing counseling agency click here, and for a larger listing of HUD-approved housing counseling agencies around the country go to the HUD website.
Financial education for our children is important because they are the future homeowners. When a child is old enough to recognize the McDonald’s golden arches, they are old enough to learn about money. It has to be age appropriate, but they will learn if it is fun and consistent. There are many computer-based financial education programs for children. During community, family or faith-based events, consider offering family financial events – presenting financial information for children and adults. Engaging the children will lead to parent engagement.
We need to talk more and plan better. In our community, homes are lost when a parent dies, the heirs cannot afford the mortgage or the taxes and there is no life insurance policy in place to cover it. Homeownership is reduced when we don’t talk about the future. When a family loses their home, generational wealth is lost.
While government initiatives will support African American homeownership, community based homebuyer and financial education programs must be at the forefront. By working together at a grassroots level we can inform, motivate and lead African Americans to achieve and sustain homeownership.
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