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» VISIT US ONLINE @ DSNEWS.COM 83 and Demos, most of this wealth inequality can be attributed to the differing rates of homeownership between whites and people of color. Homeownership has long been the primary way that most middle-class families build wealth and economic security. Widespread access to mortgage credit is critical for building family wealth, closing the racial wealth gap, and sustaining the housing market overall—which, in turn, contributes significantly to our overall economy. e lasting impacts of the Great Recession have also eroded the modest increase in homeownership rates that African-American and Latino families enjoyed in the years since the passage of the Fair Housing Act in 1968. "Foreclosures by Race and Ethnicity: e Demographics of a Crisis," a 2010 research report by the Center for Responsible Lending, found that African-Americans and Latinos were unfairly targeted with risky adjustable-interest- rate mortgages leading up to the housing crash of 2008 and faced foreclosure at a rate 2 to 2.5 times greater than whites. It further found that many of these borrowers qualified for safer loans with fixed-rate mortgages. Unfortunately, the decline in homeownership that followed the Great Recession wiped out 30 years of homeownership gains among African-Americans and substantially reduced the homeownership rate among Hispanics. Between 1970 and 2000, the African-American homeownership rate increased 5.5 percent and the Hispanic homeownership rate increased 2.9 percent. Since 2000, the homeownership rate decreased 6.1 percent among African-Americans and 1.8 percent among Hispanics. While Hispanics are starting to experience a recovery, the JCHS report shows that African-Americans are not, and in fact remain at levels of homeownership comparable to when the Fair Housing Act of 1968 first became law. Today, the opportunity to purchase, maintain, and refinance a home remains elusive for significant numbers of low-wealth families and people of color. As a result, these communities lag far behind wealthier and white communities. Pricing is a critical challenge in the extension of mortgage credit to families of color. Underwriting structures determine if borrowers are creditworthy, but pricing structures determine if a creditworthy borrower can afford a mortgage. Differential pricing creates an additional barrier to mortgage credit by increasing the price, sometimes significantly, for some borrowers relative to others. ere is evidence of price acting as a barrier even in today's mortgage market. For example, although Fannie Mae's guidelines allow the GSEs to purchase loans with credit scores as low as 620 and loan-to-value (LTV) ratios of up to 97 percent, very few loans purchased by the GSE feature these characteristics. One reason is that excessive risk-based pricing by both the GSEs and private mortgage insurers add significantly to the cost of loans for borrowers with lower scores and less wealth due to historical discrimination for a down payment. e combination of loan-level price adjustments (LLPAs) and mortgage insurance (MI) premiums adds over 300 basis points to the cost of a mortgage for a borrower with a credit score of 620 and an LTV of 97 percent. According to the Urban Institute, these redundant requirements have prevented an additional 6 million mortgage loans from being originated. Moreover, CoreLogic estimates that more than 250,000 of these loans could go to borrowers of color annually. Because of these unnecessary pricing restrictions, FHA continues to serve as a vital source of mortgage credit for lower-wealth families. Moreover, borrowers of color are overrepresented in FHA-insured mortgages, including upper-income families of color. An FHA mortgage is often their only option despite the reality that many of these consumers might have the income to sustain monthly payments but lack the down payment or savings for a lower LTV conventional loan due to past discrimination within the mortgage market. Earlier this year, a newly released CRL research report entitled "Repairing a Two- Tiered System: e Crucial but Complex Role of FHA" found that FHA purchase-market share among high-income African-American and Latino borrowers had increased the most. is contrasts with pre-Recession patterns. Since 2009, FHA purchase-market share increased by 642 percent for African-Americans and 904 percent for Latino borrowers, respectively. If fair housing is to become a reality in America, it will require not only the enactment of federal laws like the Fair Housing Act, Equal Credit Opportunity Act, and Community Reinvestment Act but also robust and ongoing enforcement. Every level of government can and should play a role in delivering a housing market with a level playing field, without regard to race. It is time for all of America to embrace the spirit as well as the letter of these laws without regard to race, ethnicity, gender, or disability. Every creditworthy consumer should have the same level of consideration—and access. Just as President Johnson stated 50 years ago, "We have come some of the way, not near all of it. ere is much yet to do." Unfortunately, the decline in homeownership that followed the Great Recession wiped out 30 years of homeownership gains among African- Americans and substantially reduced the homeownership rate among Hispanics.

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