Bringing resolve to meet a homeownership commitment
From the COVID-19 pandemic to soaring unemployment, African Americans face a number of challenges to homebuying this year. Cerita Battles of Wells Fargo discusses the commitment to boost African American homeownership amid adversity.
Before the COVID-19 crisis, the homeownership rate for African Americans had risen to 44% — its highest point in eight years. But amid the pandemic’s economic fallout, that mark could now be in jeopardy.
For Cerita Battles of Wells Fargo, that increases the urgency of a commitment the company made three years ago to boost African American homeownership.
“It’s imperative that we understand the impact the coronavirus economic crisis could have on certain segments of the population, especially minority communities,” said Battles, head of diverse segments for Wells Fargo Home Lending. “And we know the more we position ourselves from a leadership perspective to serve people in need, the more we can help them navigate and rebound in these unprecedented times.”
By many indications, the COVID-19 outbreak has had a disproportionate effect on African Americans, who account for more than one-third of the total deaths, despite making up just 14% of the population surveyed by a recent Associated Press analysis.
Fueled by the COVID-19 economic crisis, African American unemployment has soared, reaching 16.8% in May, according to an article on CNBC.com. The growing joblessness could eventually undercut African American homeownership and lead to another foreclosure crisis, further widening the racial wealth gap in the U.S. The issues of wealth disparity and economic inequality have come into focus recently along with calls for social justice amid the nationwide civil rights protests that began in Minneapolis after George Floyd, an unarmed African American, died while in police custody.
Wells Fargo is taking on these challenges as it pursues its goal to help address economic inequality by expanding homeownership for African Americans, who have historically lagged far below the national average (65.3% in the first quarter of 2020 [PDF]). In 2017, the company announced a 10-year commitment to create 250,000 African American homeowners through $60 billion in home lending and $15 million in homebuyer education and counseling.
In three years since the announcement, Wells Fargo’s commitment has created 60,527 African American homeowners through $15.2 billion in home loans and an investment of $8.5 million in homebuyer education and counseling, according to company data. Company leaders remain confident the company can hit its targets.
“What we do now during adversity to sustain and grow homeownership in the African American community will strengthen the foundation for the progress we make in the future,” said Mike Weinbach, head of Wells Fargo Consumer Lending. “Our resolve is unshaken in supporting the financial health of African Americans and all the diverse communities we serve.”
“Our resolve is unshaken in supporting the financial health of African Americans and all the diverse communities we serve.” — Mike Weinbach, head of Wells Fargo Consumer Lending
During the COVID-19 crisis, Wells Fargo’s payment deferrals and other mortgage relief have been focused on helping homeowners in the short-term. Its homebuyer education and counseling — part of the African American commitment — is aimed at helping grow homeownership in the long-term.
Ultimately, Wells Fargo’s goal is to help close the racial wealth gap in this country, and be part of the solution to economic inequality, which, in part, has contributed to the current civil unrest across the U.S.
As head of the outreach to diverse communities, Battles discussed Wells Fargo’s accomplishments and its determination to follow through on its efforts as the first major U.S. bank to publicly announce its home lending commitment to the African American sector.
Q: What is your take on the progress Wells Fargo has made since the 2017 launch of its commitment to African American homeownership?
Battles: From an overall commitment perspective, I think we are doing exactly what we intended to do. We were the first lender to make a broad commitment to a particular segment of the population. At that time, the homeownership rate for African Americans was 41.7%, very low then. So a big part of the commitment was to go out and make a difference in that homeownership rate. It was no easy feat, and we knew we couldn’t do it by ourselves. You have to make sure you are leveraging every available resource — people, partners, products, and programs — to make a real difference. So far, I think we’ve done a great job, but there is a lot more work to be done. We are challenging other lending institutions to do the same, because it’s going to take a village to raise the African American homeownership rate even more and close the gap with the overall rate.
Q: The African American homeownership rate improved two straight quarters at the end of 2019, then held steady in the first quarter of 2020. What factors contributed to that?
Battles: I would say the first thing we did was to create an awareness of what has happened in recent history. In times past, African American communities were affected disproportionately by economic adversity, such as the foreclosure crisis. The first thing you have to do is instill confidence in those communities and families. There are many adults now who as children witnessed that foreclosure crisis, and have not even sought out homeownership. We’ve partnered with a lot of advocacy groups, trade organizations, and nonprofits that have a key influence in the African American community. We want to help create that awareness and dispel any myths about homeownership. We also bring education to the table. We’re investing millions of dollars in nonprofits that provide counseling and guidance. That helps to create what we call sustainable homeownership, which will endure even in tough times.
Q: What have been some of the most effective ways to reach African Americans and communicate your homeownership message?
Battles: One of our strategies is to partner within the core areas of the communities, in particular with churches and faith-based entities. We looked at how we could partner with churches to make sure we had an opportunity to create an awareness and grow homeownership that way. One of the things I’ve done personally in my own city is to talk with my pastor about how we could go about educating our congregation around homeownership, wealth management, and other aspects of financial health. I did a survey of the church and asked them to describe how they think about homeownership. You would be amazed at the number of people who wanted more information about homebuying; people who said they had lived in an apartment their whole life and never even imagined they could own a home. During the COVID-19 restrictions, we partnered with a nonprofit to develop some virtual sessions and seminars for the congregation. It’s all just a matter of recognizing what resources you bring to the table to help people. It doesn’t have to start big. You can start at the individual level.
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