LatinaLista — There’s no denying that the housing fiasco played a big role in the overall crisis that threatened our country’s financial system. Yet, what should be challenged is how communities of color should be the scapegoats of the housing crisis. Because so many black and Latino families were victimized by predatory lenders, it was these families who were disproportionately affected when the crisis in housing occurred.
Predictably, the federal response to the housing crisis has been more reactionary than solution-oriented. In their quest to keep anything like this from crippling our economy again, regulators want to mandate new down-payment regulations. The only problem is it threatens to exclude low-income blacks and Latinos from ever having the opportunity to own a home.
A new report titled “Balancing Risk and Access: Underwriting Standards for Qualified Residential Mortgages,” published by the UNC Center for Community Capital and the Center for Responsible Lending, found that if federal regulators set down-payment standards on new mortgages at 20 percent, it would have a profound impact on Latino and black borrowers.
The results are particularly striking for African-American and Latino home buyers. A mandatory 20 percent down-payment requirement would exclude about 75 percent of African-American and 70 percent of Latino borrowers who could be successful homeowners from obtaining fairly priced mortgages.
The paper’s authors say that such a high down-payment would, in essence, create a dual mortgage market that “disadvantages historically underserved borrowers.” They argue that criteria already in place, like credit scores and down-payment requirements, limit access to home ownership for low-income and minority households.
The authors argue that the best course of action is to require a small downpayment. It still would have the desired outcome of guarding against a default and it allows for more people to have access to fair mortgage loans.
Nobody wants to lose their home. For the low-income and black and Latino homeowners, their homes are seen as less of an investment as a form of security for them and their families. Owning a home means never having to worry about being homeless when a job disappears or salaries are slashed.
Owning a home means having a place to have extended family gather and/or room for elderly parents to share.
Owning a home brings a peace of mind that in a changing world is, most times, the only constant.