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Homeownership notebook: Report outlines state's wide racial homeownership gap

Posted on August 5, 2021

An annual report on mortgage lending trends in Massachusetts was a sobering reminder that despite program’s like MHP’s ONE Mortgage, the Commonwealth still has a long way to go to address its racial homeownership gap.

Published by the Massachusetts Community & Banking Council, this year’s Mortgage Lending Trends Report found that the state is still lagging in the percentage of home loans made to people of color.

Key findings of the report, prepared by the UMass Donahue Institute’s Economic & Public Policy Research Group, included:

  • In 2019, across the state, home purchase loans to borrowers of color did not match their respective population shares. Black adults comprised 7.4 percent of the statewide population, yet only received 3.5 percent of conventional loans.
  • Hispanic/Latinx residents comprised 10.7 percent of the adult population, but received 6.3 percent of conventional loans.
  • Low and moderate income borrowers are accessing home mortgage credit in only specific areas. Fifty percent of the loans to low and moderate borrowers were located in just 20 municipalities, 17 of which were Gateway Cities.

The presentation was followed by a panel discussion which was moderated by MHP Homeownership Director Elliot Schmiedl and Michelle Meiser, assistant vice president of community partnerships at Cambridge Trust. Schmiedl oversees MHP’s ONE Mortgage Program, which since 1990 has helped over 23,000 low- and moderate-income buyers purchase their first home, half of whom are people of color.

Much of the discussion focused on the lack of homes to buy, rising prices and the impacts of COVID-19. Denisha McDonald, sales project coordinator for affordable homeownership developer Oxbow Urban, said that as a result of the disparities, many people are delaying their efforts. They can’t afford to buy in the current market so they are waiting for a crash. Others are moving outside of Boston because it isn’t affordable anymore, despite increased down-payment and closing cost assistance from the City of Boston and other affordable homeownership programs.

“Although they already have a great pre-approval that is higher than they would have without the (closing cost assistance) programs, they still can’t afford to buy a home in Boston,” McDonald said. “Right now there are no single families under $450,000 or even under $500,000. So there’s a big gap in the market right now for people getting pre-approved and what they’re able to buy.”

City Councilor Lydia Edwards explained how Boston's long history of segregation has played a role in the city's low homeownership rates in certain neighborhoods and across the city. She talked about how the city is trying to change this. One change she highlighted was the City of Boston's decision in 2020 to include fair housing requirements in its zoning codes to ensure that discriminatory practices will not be perpetuated and that developers will take steps to provide further access to housing and homeowership opportunities. Edwards was the driving force in this effort and said she hopes this will be remembered as a historic step in providing more opportunities for homeownership throughout the city.

Breakfast salutes resilience; CEO recalls ownership journey

During the 12th Annual Breakfast of the Mel King Institute for Community Building, the issue of residential displacement was put into focus during opening remarks. A land acknowledgment statement was read, a sobering reminder of this country’s history:

“We acknowledge the sacred lands where we work, live learn and build community has been a place where people have lived for over 13,000 years. This land is the territory of the Massachusetts, Pawtucket and their neighbors, the Wampanoag and Nipmucs who have stewarded this land for hundreds of generations. We recognize the repeated violations of sovereignty, territory and water, perpetrated by invaders that have impacted the original inhabitants of this land for 400 years. We extend our respect to citizens of these nations here today and their ancestors who have lived over 500 generations and to all indigenous people.”

The virtual breakfast centered on the theme, “Celebrating Community Resilience.” Presentations were also made on the institute’s community building efforts and mentoring program.

The president and CEO of NeighborWorks America reflected on how the steps she took to become a homeowner at an early age played an important role in where she is today in her career and commitment to community service.

Marietta Rodriguez said that when she was just out of college her father signed her up for a homebuyer education class. She learned through that class about a down payment assistance program. She purchased her first home and then she was asked to be on the organization’s board of directors as one of the youngest members, went to work for them, set up a program, and then eventually went to work for NeighborWorks America.

“Opportunities present themselves to folks and you don’t always know when there’s a life-changing opportunity.”

Rodriguez was asked about opportunities to promote diversity, equity, and inclusion in the workplace – how organizations can promote leadership among people of color. She spoke of intentionality.

“It takes time and intention to step back and say, ‘Who is not here? Who are we not including?” In terms of staff I also think it takes intentionality. Think about opportunities, how we grow staff, build talent, build managerial muscle to mentor and have that infused in all parts of the organization, not just in hiring but in other things like new programs, how organizations hire vendors.”

ONE+Boston continues to help people of color buy homes

MHP’s joint effort with the City of Boston to boost homeownership in the city is continuing to show good results in helping low- and moderate-income buyers and people of color buy in the city.

As of July 31, ONE+Boston, five participating lenders have combined to close 86 loans. Fifty-nine loans (76 percent) were made to people of color – Black (32), Hispanic/Latinx (24) and Asian (3).

Another encouraging figure is that 54 of the properties purchased (63 percent) were market-rate properties. This reverses a trend from previous years, when approximately two-thirds of our Boston volume has been deed-restricted affordable units that were built with public funds. For the consumer, buying a market-rate property means they can realize the full appreciation of the property upon resale.

ONE+Boston combines the low-cost features of the statewide ONE Mortgage program with $8 million in city funds to help more first-time Boston homebuyers buy in the city. With the additional city funds, ONE+Boston is able to offer discounted interest rates and increased down payment assistance to first-time buyers.

Five lenders currently offer the program – Santander Bank, Boston Private (now Silicon Valley), Cambridge Trust, Citizens Bank and most recently, the City of Boston Credit Union, which just closed its first loan. More information can be found on the ONE+Boston web page.

ONE success story from Boston 

In case you missed it, Part 1: MHP recently published a story on how Boston resident Jacqueline Coston bought her first home with ONE Mortgage and support from the City of Boston. Just 26, Coston said she began charting her course toward homeownership while in college. Earlier this year, she bought a two-family that is near her family. For more information, read this story on Coston's path to homeownership.

In case you missed it, Part 2: Homeownership Notebook is a new series by MHP which will attempt to keep up issues important to increasing homeownership and how MHP's ONE Mortgage is responding to meet the need. This is the second in what we hope will be many. Here's the link to our first homeownership notebook.

(This notebook was compiled by MHP Communications Coordinator Lisa Braxton. ONE+Boston data was provided by MHP Program Manager Isabel Cruz. Questions or comments? Email lbraxton@mhp.net).