By: Cerita Battles, SVP, head of Retail Diverse Segments, Wells Fargo Home Mortgage
Black History Month celebrates the achievements of African Americans and the progress that has been made to achieve racial equality in this country. This also is an important time to recognize work that still needs to be done to achieve that equality.
One area is homeownership, where African Americans lag behind all other ethnic groups when it comes to owning a home.
People from rapidly growing diverse communities represent the majority of growth among potential first-time homebuyers. According to the 2010 Census Bureau, of the 14 million new households expected by 2024, 75 percent of those will be diverse. For many Americans and particularly African Americans, homeownership is an integral component of the American dream, and a way to build security and wealth for families.
However, the African-American homeownership rate does not align with the significant desire to own a home. The current homeownership rate for African Americans, about 42 percent, is the lowest among all ethnic minorities. As one of the nation’s leading lenders with a team of mortgage professionals dedicated to helping customers achieve the dream of homeownership, Wells Fargo stepped up its efforts to positively impact African-American homeownership. During Black History Month in 2017, the company announced a 10-year commitment to help increase African-American homeownership that includes: $60 billion in purchase lending to create at least 250,000 homeowners; a focus on increasing the diversity of its sales team including African-American Home Mortgage Consultants; and dedicating $15 million toward homebuyer education and counseling initiatives. To achieve this important work, Wells Fargo is proud to have the support of the National Association of Real Estate Brokers, the NAACP and the National Urban League.
It has been two years since we made that announcement. We continue to make progress on that commitment, helping more customers become educated about and prepared for the homebuying process and guiding and supporting them as they travel the journey to become homeowners.
Our commitment to increase African-American homeownership is part of Wells Fargo’s overall Advancing Homeownershipsm effort, which brings together people, partners and resources to create new opportunities for long-term, successful homeownership. In addition to the African-American lending commitment, this effort includes programs like Neighborhood LIFT®, which helps low- to moderate-income families achieve homeownership with homebuyer education and down payment assistance. Since, LIFT programs have helped to create nearly 20,000 homeowners.
Even though we are making progress with our African-American lending commitment, we realize there is still much work to be done to raise the homeownership rate of this segment of the population. Like many Americans, African Americans desire to own homes, but are often challenged by industry barriers like affordability and lack of inventory. And even though we have seen improvements in the economy, underemployment and unemployment are factors in the inability to own a home.
In addition, there are misconceptions about homeownership and lack of knowledge about the process that create perceived barriers to owning a home. One of the most-believed myths is that is takes a 20 percent down payment in order to qualify for a loan. That’s not true. Many lenders, including Wells Fargo, offer financing options with a low down payment. Another myth is that borrowers need perfect credit. It’s important for aspiring homeowners to speak with a lender to separate the myths from the facts when it comes to purchasing a home. Homebuyer education and counseling are key in helping aspiring homeowners avoid myths, and create more confidence and knowledge when it comes to pursuing homeownership. That’s why investing in education is such a critical part of the African-American homeownership commitment.
Wells Fargo views homeownership as a pathway to financial success for our customers, a source of stability in communities and a key driver of our economy. We want to help people find the place they will call home – the place where their lives will happen, where they will create memories, spend time with friends or raise their families. We are dedicated to helping those who want to achieve homeownership, and our African-American commitment is one way we are working to do it.
For more information on home mortgage, visit WellsFargo.com.