A conversation on homeownership and credit
An expert panel focuses on how to boost sustainable homeownership for first-time homebuyers, diverse communities, and others.
Owning a home is an important part of the American dream. But while the desire to own is strong — especially among diverse populations and millennials — many see the avenue to homeownership as paved with challenges.
That is one of the key findings of Wells Fargo’s latest “How America Views Homeownership” survey — findings that helped spur the company to convene a national panel discussion on real and perceived barriers to owning a home, myths related to credit and down payment requirements, and today’s tight credit environment.
Franklin Codel of Wells Fargo Home Lending says the company is committed to joining others across the housing spectrum in working on how to help. He also says Wells Fargo aims to jumpstart sustainable homeownership that is sensible, responsible, and affordable for qualified home loan borrowers. The company offers a range of options, including low down payment loans like yourFirst MortgageSM , financial education and counseling, online assistance, and other measures.
“We believe strongly in the positive impact that what we’re doing can deliver for individuals, for families, for communities, and for our nation as a whole,” he said at the panel event, which took place at the National Press Club in Washington, D.C. “We all have a lot at stake, and we want to be part of both exploring and delivering solutions to the marketplace.”
Survey data shows that “appetite for homeownership” is strongest among Hispanics, African-Americans, and millennials. Nevertheless, homeownership rates for those groups lag the rest of the population.
“Countering that dynamic will require collaboration across the industry to address homeownership ‘myths,’ and to provide programs, policies, and products that fit the needs of distinct markets,” Codel said. “We need to address the challenges together. We’re eager to work with our partners, stakeholders, policymakers, and regulators to ensure that we do our part to lead the conversation and achieve the right outcomes.”
A need for balance
During the discussion, Codel introduced the panelists:
- Martin Eakes, co-founder of Self-Help and the Center for Responsible Lending
- Laurie Goodman, co-director of the Urban Institute’s Housing Finance Policy Center
- Gary Acosta, co-founder and CEO of the National Association of Hispanic Real Estate Professionals
- Cy Richardson, head of the National Urban League’s economics and housing programs.
The panel was moderated by Brad Blackwell, head of mortgage portfolio lending for Wells Fargo. (In the photo above, Blackwell [left] and Codel are shown with the panelists and Peter Diliberti, head of capital markets for Wells Fargo Home Lending.)
Panelists acknowledged Wells Fargo’s initiative and commitment, noting its significance coming from the largest U.S. mortgage lender and servicer.
Goodman of the Urban Institute said that a broad-based effort by the private, public, and nonprofit sectors can help elevate the nation’s homeownership rate, which has fallen to 64.5 percent from a high of nearly 70 percent in 2007. The Urban Institute predicts the rate will fall to 61.3 percent by 2030, fueled by general wage stagnation, delayed family formation, and the growing population of millennials and minorities, which tend to buy homes at a slower rate than non-minorities, she said.
Meanwhile, the stricter lending standards that have been put in place since the financial crisis have made it tougher for homebuyers to get access to credit, she said, noting also that lenders and regulators need to return some balance to the system.
“If we restored 2001 lending standards — which were very reasonable — there would have been 1.2 million additional home loans in 2014,” she said. “Cumulatively, there would have been 5.2 million additional loans from 2009 to 2014, with a more reasonable set of credit standards. And that is something we can do something about.”
A personal touch
Eakes of Self Help recalled that he helped start a nonprofit decades ago that provided mortgages to single African-American mothers in North Carolina. It was the first time he’d worked with mortgage loans in an economically challenged community, and none of his banking friends at the time thought he had a chance of success.
“I told them, ‘There are some things you know about finance that I’ll never know,’” he said. “But there are some things I know about faith and trust in communities that you will never understand unless you grow up and live there.”
“The human element . . . needs to be injected into the process.”
His organization went on to make home loans of $100 million in its first 10 years, and never lost a penny, he said: “It wasn’t that I was smarter. I just turned out to be right.”
Richardson of the National Urban League said many lenders today need to have that kind of personal touch in working with diverse populations.
“We are often too quick to talk about housing finance as if it were all about the business,” he said. “But in many cases, it’s the human element that needs to be injected into the process. I think we have a lot of heavy lifting to do to prepare diverse populations so they can make use of the products that lenders bring to the market.”
Concluded Acosta of the Hispanic Realtors group: “There is actually a very pragmatic side of being inclusive with homeownership. If you have a society where people feel vested, where people feel that they are part of the system, then you’re going to have a better country. People are going to feel they have a vested interest in the well-being of their communities and their country.”