There’s good news for home buyers in Philly: a recent study conducted by Zillow has found that Philadelphia is still a buyers’ market. In fact, research shows that the Philadelphia metro region actually ranks third on the nationwide list of top buyers’ markets. And while the housing market was poised to continue on an upward trajectory through 2015 partially due to a growing economy and affordable home prices, the low rates of black homeownership could use substantial improvement. Now, Wells Fargo is hoping to address this issue through an initiative that will create at least 250,000 African-American homeowners by the year 2027.
In a news release, executive vice president and head of housing policy and homeownership growth strategies Brad Blackwell stated, “Wells Fargo’s $60 billion lending goal can contribute to economic growth by making responsible homeownership possible for more African Americans in communities across the county. We are proud to be the first mortgage lender to make a public commitment to help increase African-American homeownership … and we are grateful for the support of key housing and civil rights organizations, who work alongside us to increase economic prosperity in our communities.”
The company will partner with the National Association of Real Estate Brokers, the NAACP, and the National Urban League on the initiative. The National Urban League already provides home-buyer education, but Wells Fargo will allocate $15 million to support financial education and counseling over the course of the next decade as part of the effort.
The $60 billion lending commitment will also improve the diversity among Wells Fargo’s own lending sales team.
The area sales manager for Wells Fargo Home Mortgage, Chris Holloway, noted, “We are definitely assuring that we are mirroring our markets, which means having a diverse team to be able to do that.”
He went on to say, “We are actively recruiting qualified home mortgage consultants to sort of help drive this initiative. We are trying to increase the awareness about the challenges that some of our communities are faced with around credit and down payment.”
Although the practice of redlining has been outlawed for many years, African-Americans face immense challenges when trying to buy a home. In 2016, one study found that certain methods of credit scoring, along with a lack of affordable housing, high rates of unemployment, and implicit bias, have all culminated into low rates of black homeownership and high rates of mortgage loan denial.
When Home Mortgage Disclosure Act data for Philadelphia was analyzed, it showed that only 22.38% of the 16,174 loans made in 2014 were given to African-Americans despite the fact that they represent 43.2% of the city’s population. In addition, while white applicants were denied a mortgage loan at a rate of 21.61%, African-Americans were denied 47.32% of the time.
The Wells Fargo initiative comes at a particularly pivotal time, as the U.S. Census Bureau has predicted that 75% of the some-14 million new homeowners and renters in 2024 will be ethnically diverse. African-Americans will make up the third-largest segment of new households, representing 17%.
President of the NAREB, Ron Cooper, expressed his approval of the initiative.
“The bank is the first financial institution to acknowledge publicly Black Americans’ wealth-building potential which could be greatly improved through homeownership. NAREB welcomes their entry into the struggle to close the ever-widening wealth gap for Black Americans, and looks forward to having Wells Fargo as a partner in NAREB’s ‘2 Million New Black Homeowners in 5 Years’ program,” said Cooper. “Let us all work together and grow this initiative which represents a solid and meaningful start for more Black Americans to become homeowners and wealth-builders.”