Shekhar welcomed the move, but said that long-term solutions to a systemic problem could only be achieved at the state and federal levels.
He said, “This will move the needle as you try to get three million more homeowners into the house or get 50-60% home ownership. You cannot achieve aggressive goals by saying, ‘OK, let’s train the lender or broker with better advice’. “
Industry data shows that the home ownership rate of blacks has not only shrunk over the past 50 years, but that the gap between white and black American home ownership is even worse than it was before the Fair Housing Act of 1968, which was introduced to equalize minority housing opportunities.
According to Urban Institute numbers for the first quarter of 2021, home ownership rates for black households are 45.1%, compared with 73.8% for non-Hispanic white households, while real estate agency Redfin data shows that nearly 16% of black Americans are who applied for mortgages last year were turned down, compared to just 7% of white Americans. The reasons given for the discrepancy were high levels of debt and low creditworthiness.
One solution proposed by Shekhar would be to introduce a program similar to the Veteran Administration loans that the US government is taking on. “I don’t expect private lenders to take that blow on their balance sheet, it’s the federal government that has to do it when (black households) fail,” he said.