FHLBank San Francisco, Urban Institute launch housing equity project

The Federal Home Loan Bank San Francisco is teaming with the Urban Institute in a $1.5 million collaboration to close the racial homeownership gap.

This program, called the Racial Equity Accelerator for Homeownership, is planned to run for two years and will create an incubator to develop innovations in housing finance, including mortgage underwriting and financial technology.

"The rates of Black homeownership, in particular, have plummeted to levels not seen since housing segregation was legal," Teresa Bryce Bazemore, president and CEO of the FHLBank San Francisco, said in a press release. "Our charge is to summon the highest and best thinking and move with urgency in creating solutions that scale and inspire actionable advancements in policy and practice."

Alex Lowy

The accelerator will conduct research and development on alternatives to credit scoring models and technologies that could help to overcome historical biases. It will also look to create product structures that can better support homeowners who experience temporary financial hardship.

In addition, the program will look to address the student loan debt repayment problem, which has a disproportionate effect on the Black community, the press release said.

"The evidence is clear and the time is ripe for seizing the moment, and every segment of the home lending industry should work together to address long-standing barriers," said Urban Institute President Sarah Rosen Wartell.

Creating equality in homeownership wealth could take decades even in the most optimistic scenario, according to a Zillow study released in April. At the earliest, it would be achieved by 2066; the most likely scenario places the target date at 2183.

A Fannie Mae blog post from March states it would take 114 years to close the gap if "we do nothing."

Last month, a group of Democratic Senators, led by Mark Warner of Virginia, introduced the Low-Income First-Time Homebuyers Act, proposing a 20-year government-backed mortgage program that could allow new homeowners to build wealth twice as fast as they would with a traditional 30-year loan.

Separately, Sen. Raphael Warnock, D.-Ga., introduced the upper chamber's companion bill to the Downpayment Toward Equity Act.

Supporters of the down payment assistance bill — the National Fair Housing Alliance, the National Coalition for Asian Pacific American Community Development, the National Urban League, the National Community Reinvestment Coalition, the Center for Responsible Lending, UnidosUS, and the Leadership Conference on Civil and Human Rights — issued a joint statement on Sept. 30 that not only pointed out the current Black homeownership rate is as low as it was in both 1890 and 1968, but for Latinos, it's 25 points lower than for whites.

"This unfortunate reality, coupled with the COVID-19 pandemic's disproportionate harm on American communities least able to shoulder the burden, has resulted in an ever-widening homeownership gap that has left communities of color behind with little capital to invest in wealth-building opportunities," the groups said.

This story has been amended to correct the name of the Federal Home Loan Bank San Francisco.