Oakland among cities targeted in new program to boost Black homeownership
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A U.S. Bank branch in Walnut Creek as seen on April 10. Photo: David Paul Morris/Bloomberg via Getty Images
A new mortgage program aims to close the gap in homeownership rates between white and Black Americans, and Oakland is among nearly a dozen pilot markets.
Why it matters: Homeownership is considered the No. 1 way to build long-term wealth and the benefits of financial security. But segregation, systemic racism and discriminatory policies like redlining have left many people of color — especially Black people — unable to front the costs for a mortgage.
Driving the news: U.S. Bank's Access Home Loan promises to provide up to $12,500 in down payment assistance and up to $5,000 in lender credit. The program is launching specifically in markets where people of color comprise more than 50% of the population.
How it works: To qualify, borrowers must have an income equal to or below the HUD Area Median Income for the location of their desired home.
- They must have a FICO score of at least 640 or alternative credit data like monthly rent payments if that's not available.
- In addition to assistance funds and lender credit, buyers receive a fixed interest rate for the life of the loan and only need 3% of the purchase price for the down payment.
- The program is designed for first-time homebuyers, but anyone who qualifies can access it.
What they're saying: Lenny McNeill, who leads strategic markets and affordable lending for U.S. Bank, told Axios that when developing the program, "we knew we couldn't leave Oakland out of the conversation."
- A 2021 data initiative by UC Berkeley researchers put Oakland as the 14th most segregated U.S. city.
- Its median household income is around $85,600, according to the U.S. Census Bureau.
- "It's going to obviously take time, and it's going to take more than U.S. Bank," McNeill noted. "But we are certainly glad to launch this in the city of Oakland because we do feel that there is not only a need but a tremendous opportunity for us to make a difference."
The big picture: The gap in homeownership rates between white and Black Americans is at its highest in 10 years, according to a March report from the National Association of Realtors (NAR).
- In the U.S., just under 73% of white people are homeowners, compared to 44% of Black people, 51% of Hispanics and 63% of Asian Americans, per NAR.
- Only 9% of Black renters can afford to buy the typical median-priced home, NAR found.
- They are also denied mortgages 84% more often than white applicants, a 2022 Zillow analysis of data from the Home Mortgage Disclosure Act shows.
Yes, but: Studies indicate that down payment assistance can play a role in helping increase Black homeownership.
Of note: U.S. Bank is piloting the program in 11 cities — including Little Rock, Arkansas, and Milwaukee — but it isn't the only institution taking steps to bolster homeownership among communities of color.
- Bank of America announced last fall that it will offer first-time buyers in certain neighborhoods "zero down payment" mortgages.