Financial Racism: A Concept Promoted By People Who Want To Make Money Off Lending To Blacks
April 26, 2018, 04:25 PM
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A letter to the editor featured in the New York Times:

Racism in the Housing Market

April 23, 2018

To the Editor:

In “A ‘Black Tax’ on Housing” (editorial, April 15), you say the reduction of the black homeownership rate to levels not seen since the 1960s when housing discrimination was legal is a reflection of the “persistence of financial racism in America.”

Yes, because racism is still pervasive, invading both the conscious and subconscious thinking that leads to lending decisions against minority home buyers. To ignore this would make us all guilty of perpetuating the injustice that continues to plague our country today.

Lenders have a social responsibility they cannot ignore to turn the tide and stop financial racism in its tracks. We call on the lending industry to eliminate commissions, leverage technology to remove racial bias, and help more home buyers take advantage of affordable lending programs.

If the entire industry can take these same steps, perhaps we can finally start to address and move to eradicate the despicable role that racism is playing in minority homeownership levels, even as we wait for the law to catch up.


The writer is chief executive of Better, a mortgage lender.

The concept of disinterestedness is lost and gone forever.

This reminds me of lender Angelo Mozilo’s Harvard address of 15 years ago:

The American Dream of Homeownership: From Cliché to Mission

Presentation by Angelo R. Mozilo Chairman, President and Chief Executive Officer, Countrywide Financial Corporation

The Joint Center for Housing Studies of Harvard University

John T. Dunlop Lecture

Sponsored by The National Housing Endowment Washington, DC

February 4, 2003

… However, despite the fact that approximately $2.5 trillion in mortgage loans were made in 2002, the gap between low income and minority homeownership, and what is classified as white homeownership, remains intolerably too wide. Therefore, expanding the American Dream of Homeownership must continue to be our mission, not solely for the purpose of benefiting corporate America, but more importantly, to make our Country a better place. …

As President Bush said last October: “Two thirds of all Americans own their homes, yet we have a problem here in America because fewer than half of the Hispanics and half of the African Americans own their home. That’s a homeownership gap. It’s a gap that we’ve got to work together to close for the good of our Country, for the sake of a more hopeful future. We’ve got to work to knock down the barriers…”

While the number of minority homeowners has advanced recently, climbing from 9.5 million in 1994 to 13.3 million in 2001 – an increase of 40 percent – the fact remains that it is still not at a level equal to that of white homeownership. And as President Bush pointed out, the homeownership rate for African Americans is 47 percent and for Hispanic Americans it is 48 percent, a stark contrast to the homeownership rate of 75 percent for white American households. That means there is currently a homeownership gap of over 25 points when comparing white households with African Americans and Hispanics. My friends, that gap is obviously far too wide. It has been far too wide for far too long. And when adding new factors into the equation – like an influx of new immigrants or continued reduction in the supply of affordable housing – it has the potential to become far worse.

So tonight, I want to discuss why that gap persists and how Countrywide is trying to address it. … If we don’t get a better handle on these issues, as I will discuss, I would argue that the homeownership gap will not only remain, but there is a good chance it will widen and the homeownership rates among low income and minority borrowers will continue to be depressed. …

One of the more obvious resolutions to the Money Gap is the elimination of down payment requirements for low-income and minority borrowers. Current down payment requirements of 10 percent or less add absolutely no value to the quality of the loan. It is the willingness and the ability of a borrower to make monthly payments that are the determinants of loan quality. Over the past 50 years, I have personally interviewed thousands of potential homebuyers and in the vast majority of cases, the barrier standing in between them and the house of their dreams was the down payment. That barrier must be eliminated by offering customized programs to those borrowers who cannot meet the current down payment requirements.

Equally important, we must reduce the documentation required to make any and all loans; we should be able to approve loans in minutes, rather than days, and close loans in days, rather than weeks. …

So I’d like to use this forum this evening to say that Countrywide is once again re-dedicating itself to expanding the dream of homeownership. Tonight, I am announcing the extension and expansion of our current 5-year, $100 billion challenge through the year 2010, with the commitment to fund a total of $600 billion in home loans for previously underserved Americans in this decade.

Countrywide is proud to make this commitment. We’re excited about our new goal. We’re eager to reach that goal. And, I can assure you that we will reach that goal. As we had envisioned in 1992, House America offers unique loan products that have been specifically designed to meet the needs of minority and low- to moderate- income borrowers. But it also does more. It has become not just a lending program, but a more comprehensive effort that devotes considerable intellectual and financial resources to increasing homeownership among minority and low- to moderate-income individuals and families. …

… It is an effort absolutely committed to education and outreach, both in English and Spanish, both online and in local communities, both at local home-buyer fairs and at lending workshops, and with our many partners, like Fannie Mae, Freddie Mac, FHA, the Congressional Black Caucus, the National Council of La Raza, AFL-CIO, and faith-based groups across the Country, just to name a few. I want to specifically and especially recognize Franklin Raines and his entire team at Fannie Mae for providing a great deal of the resources that have made it possible for us to achieve our House America objectives. …

It is an effort that has enabled Countrywide to become the number one lender to Hispanics for the last 6 years and the number one lender to African Americans for the past 3 years. …

… It is time, once and for all, to narrow and ultimately eliminate the homeownership gap.

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