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Barriers to Homeownership

In 2018, Reveal News, from the Center for Investigative Reporting, released an analysis of mortgage lending in communities across the United States; that analysis was described in the story Kept Out. Based principally on their analysis of Home Mortgage Disclosure Act (HMDA) data, Reveal “…found a pattern of troubling denials for people of color across the country, including in major metropolitan areas such as Atlanta, Detroit, Philadelphia, St. Louis and San Antonio.”

The statistical analysis was supported with a series of interviews conducted by Reveal reporters Aaron Glantz and Emmanuel Martinez — some of which were of Black Philadelphians relating the difficulty they encountered in the mortgage lending process. Glantz and Martinez also presented a more detailed Philadelphia case study that presented both the city’s HMDA data and interviewees — people who wanted to obtain mortgages and others (e.g., realtors) who worked with the mortgage applicants.

So disturbing were the findings in this report that the Pennsylvania Housing Finance Agency (PHFA) decided more needed to be learned about the problems people experience in the process of getting credit and buying a home. Because PHFA supports a network of housing counselors that work with a significant number of people who wish to become first-time homebuyers, there was a unique opportunity to create a program and study the experiences of counseling clients in order to get a more nuanced and complete picture of the differential experiences of White people and people of color. PHFA enlisted the support of several counseling agencies, and Reinvestment Fund’s Policy Solutions, to chronicle and analyze those experiences. PHFA called the program Barriers to Homeownership. 

Key findings from the report include:

  • Black and Hispanic mortgage applicants who have similar debt-to-income and loan-to-value ratios as White applicants are denied at higher rates. In some comparisons, lesser qualified White applicants are denied at lower rates than better qualified Black and Hispanic applicants.
  • Homeownership rates of people of color are about 30 percentage points lower than White homeownership rates in the Commonwealth of Pennsylvania.
  • COVID presented a multi-dimensional challenge for potential homebuyers in their quest to become homeowners (e.g., contracted COVID themselves or a family member got sick, lost job/hours, used credit cards to cover expenses, counseling and home search process went virtual). Some reported benefitting economically from the augmented unemployment compensation.

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