GETTING SHUT OUT OF HOME
minorities lag in mortgages
The so-called American Dream is a dream deferred for minorities in New York City. Blacks and Hispanics are increasingly less likely than whites and Asians to own homes here — a problem linked to rapidly rising prices, ongoing income disparity and, some believe, racism.
Just 26.5% of blacks and 16.1% of Hispanics now own their own homes, while 41.6% of Asians and 41.4% of whites are homeowners, according to new data by local listings giant StreetEasy.
Blacks and Hispanics are also far more likely to be denied a mortgage in New York City than whites or Asians. Citywide, 33.6% of applications from blacks and 29.2% of applications from Hispanics were rejected by a financial institution, compared with 15.8% of whites and 18.5% of Asians.
“The numbers really highlight how race matters,” StreetEasy data scientist Alan Lightfeldt told the Daily News. “There’s a progressively less diverse pool of New Yorkers who are successful in securing the financing they need to own a home.”
The biggest problem with low homeownership rates among minorities is that owning property has traditionally been the path to financial security.
“In New York, it’s hard enough to become a homeowner but it’s even harder for blacks and Hispanics to get their feet in the door,” Lightfeldt said.
The dire numbers are even more striking when broken down by borough.
In the Bronx, for instance, whites are 4.6 times more likely to become homeowners than Hispanics and 2.5 times more likely than blacks. Only 10.1% of Hispanics and 18.7% of blacks are homeowners in the borough, while nearly half of whites owns a home, the data show.
And in Staten Island, the denial rate for mortgages for black applicants is a jaw-dropping 51.1%, compared with just 12.4% of white buyers.
Many turn to Federal Housing Administration-backed loans, which typically have more favorable requirements for credit and income standards. Minorities account for 53.7% of traditional loan applications in New York City, but 81.1% of FHA loans. StreetEasy says its report isn’t exposing any outright discrimination, but it does highlight how the odds are stacked against minority buyers, many of whom attribute the lagging homeownership rates to low incomes, skyrocketing real estate prices and a lack of homeownership education.
And certainly “redlining” does still happen. Just last year, state Attorney General Eric Schneiderman launched an investigation into whether Ever Bank, a regional bank in upstate New York, was denying mortgages to black applicants regardless of their credit scores.
“There are so many instances across the country where less-qualified whites continue to get loans over higher-income blacks,” said Shanna Smith, president and CEO of the National Fair Housing Alliance, whose organization is currently fighting a lawsuit against Bank of America, alleging discriminatory treatment of prospective Latino borrowers seeking mortgage loans.
The Alliance filed suit after its own investigation allegedly showed that white borrowers in South Carolina consistently got loans over Latino applications, even when the Latino applicants better met the loan criteria.
But the biggest obstacle for minority homeowners in New York City is undoubtedly price.
The median household incomes for blacks and Hispanics were just $41,000 and $37,000 in 2013, respectively. By comparison, whites made a median income of $62,000 and Asians made $58,000. With real estate prices rising all across the city, more and more minorities are getting priced out of their own neighborhoods.
“It’s not an ethnic group issue. It’s a money issue,” said Rev. Charles Butler, who heads affordable homeownership seminars at Harlem Congregations for Community Improvement. “You have money, you can buy. You don’t, you can’t. It’s as simple as that. You want a house in Harlem. Well, do you have $2 million?”
Blacks and Hispanics are also more likely to have poor credit histories than whites and Asians, according to a 2015 report by the Consumer Financial Protection Bureau, a national agency. Nearly 15% of blacks and Hispanics in the U.S. have no usable credit report at all, Street-Easy’s report shows.
These “credit invisibles” often get shut out of the mortgage finance system entirely, Light-feldt said.
Advocacy groups are trying to do something about that.
Smith said NFHA is currently working with Fannie Mae and Freddie Mac to encourage the agencies to help would-be borrowers get evaluated based on their Vantage-Scores, which are more forgiving of minor delinquencies on bills for credit cards or electricity.
But, mortgage troubles aside, many would-be minority buyers said they felt sidelined by the homebuying process because of a lack of information.
“I’m not saying that it would have been better if I was white but, if my parents had been in a better situation or if I had been more educated early on, I would have been better prepared,” said Annette Cruz, a 50-year-old Harlem grandmother who is trying to save to purchase her first home.
Cruz, a docketing clerk in a law office, spent her childhood living off public assistance and food stamps before moving into a Section 8 apartment.
“I would have done this a long time ago if I had known more,” she said. “It’s scary because you don’t know if you’ll qualify or not, you don’t know if you’re getting a good deal and you don’t know if it’s a good time to buy,” she told The News.
It’s a common refrain, experts said.
“It’s a fact that there’s a lack of education,” said Anie Akpe, vice president of mortgages at the Municipal Credit Union. “I talk to so many people who, had they known what they know now, could have bought years ago. Instead, they wait until they’ve been priced out of an
the fear of getting denied can be paralyzing. adrienne williams
area and then feel like they missed the boat or that there was some conspiracy to keep them out. You have to (buy) before it’s too late.”
Some buyers don’t have any idea how important credit scores can be when finding a home or how much they need to save for a downpayment. It’s a legacy problem, Akpe said.
“If your parents or the people around you aren’t homeowners, they’re not going to encourage you or drive home the importance of homeownership,” she said.
But not everyone wants to take on the process and many are so intimidated by it that they never even try.
Indeed, blacks and Hispanics submit just 11.2% of the city’s conventional mortgage applications, despite making up 51.3% of the total population StreetEasy’s data show. By contrast, Asians make up 13.4% of the city’s population yet account for a whopping 22.4% of applications. Whites, who make up 46.3% of the population, file 32.6% of the city’s mortgage applications.
“We’re still getting applications from minorities but we’re not getting as many as we would typically expect in homebuyer’s season.” Akpe said.
The racial disparity is even more dramatic at the borough level. In the Bronx, Hispanics account for 54.6% of the population and file just 25.4% of the mortgage applications. In Brooklyn, blacks make up 31.3% of the population but file a measly 7.4% of the applications.
“I never even really thought that homeownership in New York could be an option for me,” said Carmen Dixon, 35-yearold community organizer who is currently shopping for an apartment uptown, of why she waited until now to start thinking about homeownership. “My worry is that by the time I have the money saved up, the price of the condo will have gone way up again.”
But those who have made the jump are now reaping the rewards.
“The fear of getting denied can be paralyzing,” said Adrienne Williams, a 39-year-old actress who successfully purchased an apartment on W. 126th St. several years ago. “I’m so grateful now that I made the move. It’s the best decision I ever made because now the neighborhood is booming.”