Let’s Act Now to Close the Racial Equity Gap in Homeownership

By Teresa Bryce Bazemore

The racial gap in homeownership is well documented and stubbornly persistent; it’s a problem that requires meaningful discussion and action in all corners of the mortgage finance and housing industries. Recognizing that it will take a broad and concerted effort to move the needle, Federal Home Loan Bank of San Francisco

convened a series of Homeownership Solutions Summits to explore ways to overcome systemic barriers to equity. Now is the time to put actionable solutions—like those highlighted in our just-released industry report, “Closing The Racial Equity Gap: A Call To Action”—into practice to ensure people of color have equal access to homeownership and wealth-building opportunities.

Homeownership is one of the most impactful ways that Americans build intergenerational wealth that can provide succeeding generations with financial resources for a downpayment on a home of their own, higher education, starting a small business, and more. But too often, entrenched systemic biases work against people of color and make it more challenging to attain and sustain homeownership. In the four closed-door summits we held in Arizona, California, and Nevada in 2022 and 2023, participants brainstormed innovative and constructive solutions to expanding access to sustainable homeownership and its associated benefits.

The aim of our Homeownership Solutions Summits was to bring together the mortgage finance industry’s diverse and often siloed stakeholders, who may not always realize the barriers obstructing people of color within their own niches, let alone the cumulative effects of systemic biases. We are proud that more than 150 stakeholders—including mortgage finance industry innovators, business executives, government officials, builders, affordable housing and sustainable homeownership advocates, and FHLBank member institutions, among others—answered our call to come together to form a better understanding of crisis-level disparities and share, explore, and develop evidence-based solutions to address them.

Our summits generated numerous recommendations for the industry and illustrated the powerful impact we can have when we all work together. If we are committed to change in the mortgage finance industry for people of color who deserve equal access to wealth-building opportunities, then we must all do our part and put our words into action. I am encouraged by the willingness of summit participants to press for change in their industry and in their respective communities. Among the actions that I hope to see come to fruition in the near future are:

• Expand mandatory financial education and teach the basics starting in elementary school.
• Broaden the reach of downpayment assistance programs to include buyers who earn more than 80 percent of area median income.
• Encourage the widespread adoption of novel or modern building practices that can bring down costs without sacrificing safety or comfort.
• Provide support to elected officials in favor of higher-density zoning and less-restrictive land-use ordinances.
• Modernize credit scoring to bring more creditworthy borrowers into the housing finance system.

These initiatives are just the tip of the iceberg. I encourage you to download and read “Closing The Racial Equity Gap: A Call To Action” to get a fuller understanding of the breadth and depth of issues we addressed through our four summits and to identify how you and your organization can join efforts to create a more equitable mortgage finance ecosystem.

FHLBank San Francisco is committed to advancing racial equity, and the Homeownership Solutions Summit series and resulting recommendations are part of a continuum of initiatives we’ve undertaken to that end. FHLBank San Francisco’s two-year, $1.5 million collaboration with the Urban Institute—our Racial Equity Accelerator for Homeownership—has added important, relevant data to the search for solutions in four areas that are ripe for innovation: the effectiveness of alternative underwriting methods, the impact of student debt on Black homeownership, the use of mortgage reserve products to help sustain homeownership, and, in an upcoming report, the best way to harness the power of artificial intelligence for equity in mortgage financing.

The hard work of leveling the playing field is not done, and we at FHLBank San Francisco will continue to explore innovative ideas and solutions for ensuring equitable access to homeownership and wealth-building opportunities for people of color.