Six Trends That Show Latino Homeownership is Important to the Housing Market and the Economy

By Agatha So, Policy Analyst, Economic Policy Project, NCLR

Headlines about the nation’s housing market have focused on the low homeownership rate, currently stalled at 63%, compared to a high in 2001 of more than 73%. Yet, little attention has been paid to the impact of the low Hispanic homeownership rate on America’s ongoing economic recovery, and in turn, the future of the nation’s housing market.

Overlooking this impact is a huge oversight, given that the majority of new households formed in the next two decades will be made up by homeowners of color. In fact, Latinos are expected to account for 40% of those new households. At the end of 2016, the Hispanic homeownership rate increased to 47%, but remained much lower than the peak of 50% nearly 10 years ago. With significant household growth on the horizon, creditworthy Latinos need access to homeownership to ensure that the opportunity to build wealth is available to all Americans in the decades to come.

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How Will Secretary Carson Engage Latino Homebuyers?

By Agatha So, Policy Analyst, Economic Policy Project, NCLR

Many questions remain for Dr. Ben Carson, who last month was officially sworn in as our newest Secretary of the U.S. Department of Housing and Urban Development (HUD). Since his January 12 confirmation hearing, many are still wondering how Dr. Carson will fulfill HUD’s mission and carry out the critical task of providing affordable rental and homeownership opportunities—free from discrimination—for all Americans.

On March 28, Secretary Carson had an opportunity to discuss his housing policy priorities at the National Association of Hispanic Real Estate Professionals Conference. It was an important audience for Secretary Carson—the Association represents the largest group of Hispanic real estate professionals, whose primary mission is getting Latinos into homes. This is a critical constituency, because Latinos are expected to form more than 40 percent of new households in the next decade. By 2020, Latinos are expected to account for half of new homeowners. Yet today, only 46 percent of over 14 million Hispanic households own their home, well below the rate in 2006, before the housing crisis, when nearly half of over 12 million Hispanic households owned homes.

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Your Housing Rights Are on the Line

By Nancy Wilberg Ricks, Senior Policy Strategist, NCLR

This year all eyes are on anti-discrimination laws that impact your housing rights, as the U.S. Department of Housing and Urban Development (HUD) intends to release a much-needed and improved Affirmatively Furthering Fair Housing (AFFH) rule. Congress has already tried to stymie that rule, while the Supreme Court will scrutinize a legal theory called “disparate impact” that has long helped families battle housing discrimination.

This alphabet soup of players and policies could have a big impact on where you live, how much you pay for housing, and whether or not you are denied a chance to move into a neighborhood that’s good for your kids.

Legislative Obstacles
HUD’s release of a new AFFH rule has been a point of debate for more than 40 years. Now that HUD aims to finalize the rule, Congress is working hard to ensure that it is impossible to enforce. This rule would help in multiple ways:

  • It ensures that all people—regardless of race, ethnicity, family status, or disability—have a range of choices on where to live.
  • It gives jurisdictions the tools to identify barriers to fair housing and devise their own solutions to the unique problems they face.
  • It will advance opportunity in America by shaping investments in housing, transportation, environment, health, education, infrastructure, and economic development—all essential pathways to prosperity.

Some members of Congress are doing their best to undo years of progress made in rooting out housing discrimination. In the House last week, Representative Garrett (R–N.J.) offered an amendment to an appropriations bill that would stop the Department of Justice from enforcing the disparate impact rule, Representative Gosar (R–Ariz.) created an amendment that would stop HUD from finalizing the rule altogether, and Representative Stivers (R–Ohio) deliberately offered an amendment after midnight—when few members were present to speak against it—to prohibit the use of funds for fair housing programs. These are egregious and unfounded interventions taken by Congress to impede consumer protections.

Rumblings in the Courts
Adding fuel to the fire, the Supreme Court will decide this month whether the legal theory of “disparate impact” should be modified. Under disparate impact, a housing or lending policy or practice can be ruled discriminatory if it has a disproportionate, adverse effect on a given racial or ethnic group, even if it is unintentional. Disparate impact has laid effective precedent for decades to battle redlining, exclusionary zoning, and racial steering.

Decision-makers must maintain the strength of disparate impact’s parameters. While blatant housing discrimination is rare, studies indicate that prejudice endures. Minority home-seekers are still shown fewer available housing units, raising the costs of search and constraining their choices. With a ruling later this month, the Supreme Court threatens to dilute its strength, which could compromise years of consumer wins.

Segregation endures. It is no coincidence that the Civil Rights Act, passed in 1964, led to the creation of the Fair Housing Act, on which decades of legal precedent now hang. Today’s political climate compromises these advances and has made leaders blind to the impact of housing injustice. Invalidating fair housing rights amounts to much bigger problems for communities and society as a whole. In the wake of racial and economic unrest, now is not the time to roll back civil rights.

Congress Wants You to Believe Dodd-Frank is the Problem. Don’t Fall For It.

By Nancy Wilberg Ricks, Senior Policy Strategist, NCLR

At a the National Journal event this week,  experts discussed the state of sustainable homeownership, housing finance reform, and potential solutions to systemic problems in housing. Reforming Fannie and Freddie is of critical importance to the Latino community, who will comprise half of the housing market by 2020—but we wonder why the National Journal is leading the discussion and Congress isn’t. These topics should be the central focus in Washington when it comes to improving the housing market. Instead, Congress is trumpeting this misinformed notion that Dodd-Frank is the cause of all our problems.

Dodd-Frank was the comprehensive legislation that was passed to prevent total economic collapse seven years ago. It stopped the bleeding and helped lay the foundation for a better economic system for consumers and honest dealers. To build on its successes, we must now direct our attention to how the secondary housing market is managed. That is, how do Fannie Mae and Freddie Mac, and thus taxpayers, avoid being left with all the liability and none of the benefits should another crisis rear its head?

Congress has attempted to take on housing finance reform in several iterations only to be stymied by gridlock. We know there is a way. In its joint report with the Center for American Progress, Making the Mortgage Market Safe for America’s Families, NCLR outlined a research-based roadmap to a broad, accessible, and affordable housing market. For example, there is a dire need for a fully funded Market Access Fund (MAF) to promote broader access to mortgage credit and to foster new and safe mortgage products as a way of increasing access. The MAF would also fully fund the National Housing Trust Fund (NHTF)—a state block grant program administered by the Department of Housing and Urban Development, designed to increase and preserve the supply of rental housing for very and extremely low-income families. We finally saw advances in this department late last year when the FHFA announced plans to fund both the NHTF and the Capital Magnet Fund. This is just the beginning, though.

Along with adequate funding, a new housing finance system needs a robust regulatory mechanism to monitor for safety and soundness, consumer protection, and access and affordability. While national experts grasp the importance of an improved housing finance reform system, Congress continues to use Dodd-Frank as a scapegoat. They are wasting time and taxpayer dollars, while never getting to the real issue at hand.

At Confirmation Hearing, Castro Supports GSE Overhaul and Wins Bipartisan Support

Photo: Wikipedia

Photo: Wikipedia

Last week, Mayor Julián Castro of San Antonio faced the Senate Banking Committee for his confirmation hearing as nominee to head the U.S. Department of Housing and Urban Development. Overall, the hearing went fairly smoothly, with Castro receiving support from committee Republicans Bob Corker of Tennessee and John Cornyn of Texas, who introduced him.

For the benefit of homeowners, renters, and all Americans, confirming Julian Castro as Secretary of Housing and Urban Development is the best opportunity to ensure a sustainable housing system and a housing finance overhaul that serves all communities.

A three-term mayor of America’s seventh-largest city, boasting a majority-Latino population, Julián Castro presided over San Antonio’s successful urban revitalization. As he succeeded in San Antonio, we believe he can succeed in the Obama Cabinet.

While NCLR has expressed strong support for Castro’s nomination, adding another highly qualified Latino to the Obama Cabinet, no matter who the new secretary is we urge that person to focus on ensuring real, affordable access to housing credit for communities of color in any housing finance overhaul.

Fortunately, there is strong reason to believe that such goals are consistent with Castro’s positions. Though the hearing did not delve into specifics, Castro highlighted support for major housing finance changes.

Currently, control of the two government-sponsored enterprises is placed under the Federal Housing Finance Agency, but this temporary system is unsustainable. The Senate Banking Committee recently passed the Johnson-Crapo proposal, which would overhaul the current system, replacing Fannie Mae and Freddie Mac with private capital backed by government guarantee.

Unfortunately, the current version of this bill passed in committee doesn’t do nearly enough for the Latino community, effectively cutting off unacceptable numbers of people of color and underserved communities from access to affordable mortgage credit. A newly confirmed Secretary of Housing and Urban Development could persuade the Senate to change that while also impacting access and affordability through improvements at the Federal Housing Administration. We hope that, if successfully confirmed, Julián Castro will make sustainable housing finance reform a top priority.

On HAMP’s Fifth Anniversary, Don’t Push Struggling Homeowners Over the Edge

Photo: Jeffrey Turner

Photo: Jeffrey Turner

For five years now, the U.S. Department of the Treasury and U.S. Department of Housing and Urban Development have successfully administered the Home Affordable Modification Program (HAMP) for struggling homeowners. Through this program, working homeowners secured lower and more affordable mortgage rates, enabling families hit hard by the financial crisis to stay in their homes and avoid foreclosure.

This year, the program is set to begin winding down and expire entirely in 2015. That means the nearly 800,000 homeowners with HAMP mortgage adjustments will see their monthly payments rise as soon as this year. While the rate increases can vary widely from state to state, the national average increase will be $200 a month. In states with more HAMP mortgages, such as California and Hawaii, rates will jump by $300 and $356 per month, respectively. While this might not sound burdensome to some, for working families on the brink it is potentially catastrophic.

To keep 800,000 struggling American families in their homes during our weak economic climate, HAMP’s low mortgage rates should be extended or made permanent for all participants.

When HAMP was first drawn up in 2008, the idea was to temporarily stop the bleeding from the foreclosure crisis and ease the lowered mortgage rates back to their original market levels once the economy improved after two years. In 2008, that seemed like plenty of time for homeowners to get back on their feet.

Unfortunately, this is not the reality in 2014. Incomes are stagnant for all but the richest Americans, and the economy has not sufficiently recovered. Unemployment remains stubbornly high, with Latinos especially affected. The Latino community lost vast amounts of generational wealth during the recession, and millions of families are barely scraping by.

Recognizing that the Great Recession was much deeper and the recovery slower than thought in 2008, HAMP has already been extended twice.

To raise the rates on 800,000 families now would only further damage the economy by pushing an unconscionable number of working Latino families into default. During a weak recovery, the solution cannot be to force families out of their homes.

For the sake of nearly one million American families and our entire economy, affordable HAMP mortgage rates must be preserved through an extension or made permanently available.

Budget Cuts Cost Denver Families the Chance at Buying Their First Homes

Guest blog post by Rosa Madrigal, Manager, Homeownership Services, Del Norte Neighborhood Development Corporation, NCLR Affiliate

Sold Home For Sale Sign in Front of New HouseOwning a home remains the central pillar of the American Dream.  At Del Norte Neighborhood Development Corporation (NDC) here in Denver, we help several Coloradans reach their dream every year.  Our mission is to ensure that everybody has access to quality and affordable housing.  For more than 30 years, we have addressed the severe housing needs for low- and moderate-income families in the Denver area, the vast majority of whom are Latino.  But crippling budget cuts brought about by sequestration pose a very real threat to our ability to provide those families with the critical housing services they need to purchase a home.  Continue reading

Senators Introduce Bipartisan Bill to Reform Housing Finance System

Sold Home For Sale Sign in Front of New HouseThe housing market is heating up, and so are regulatory efforts by Congress to address the fate of Fannie Mae and Freddie Mac—the two government-sponsored enterprises (GSEs) that Congress essentially nationalized during the financial crisis.  This week, Senators Bob Corker (R–Tenn.) and Mark Warner (D–Va.) introduced bipartisan legislation that would reform the nation’s housing finance system by replacing the GSEs with a new government agency that would shift more of the risks of mortgage lending to the private sector.  A new housing finance system has the potential to help sustain a robust housing market, open up housing opportunities for millions of families, and bolster economic growth for the nation.

Senators Corker and Warner should be commended for their efforts to address this critical issue.  However, the proposed bill is inadequate because it focuses on the needs of lenders and investors rather than the needs of families.  The goal of a new housing finance system should be to restore balance to the housing market and provide accessible lines of credit to broad and diverse homebuyers.  Unfortunately, the Corker-Warner system would offer limited credit and housing options that would be too expensive, especially for minorities, low- and moderate-income households, and rural households.

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