The black and white home ownership gap is larger today than it was in 1968 when the Fair Housing Act, which banned Americans from buying or renting a home, applying for a mortgage, or seeking housing aid, according to a 2020 report from signed the National Fair Housing Alliance.
Lisa Rice, President and CEO of NFHA – a national organization dedicated to ending discrimination in housing – is one of the various voices devising strategies and solutions to eradicate this inequality.
NerdWallet asked Rice to share how she was committed to fair living, her perspectives on the home ownership gap, and the changes that could improve opportunities for black Americans.
Lisa Rice’s lifelong pursuit of fair living
In 1963, while waiting for her birth, Rice’s parents decided to buy a house. Her mother chose Sylvania, then an all-white suburb of Toledo, Ohio.
“When she contacted the white real estate agent, the agent told her they couldn’t show her a house there,” says Rice. “The agent even said she could lose her license if she showed houses in this area.”
Rice’s family was directed to the Parkside Extensions neighborhood in Toledo, where her parents faced yet another obstacle. They couldn’t get a loan to buy the home they wanted as the demographics of the area shifted from white to black, a sign of risk for traditional lenders. This was a redlining in action, and with no other options, her parents were forced to get a higher rate loan from a subprime lender.
“Everyone had a middle or higher income, but it didn’t matter,” says Rice. “It was the complexion of the people who lived in the apartment.”
Rice’s connection to fair living continued into her teenage years. At the age of 15, Rice was practicing at the Toledo Fair Housing Center.
“With this internship I was bitten by the fair apartment mistake,” she says. Years later, she became the organization’s CEO.
And Rice never looked back. She has more than 35 years of experience in the fair housing industry. In her current role at the NFHA, Rice leads efforts to improve equal opportunities for millions of Americans.
With her extensive background and expertise, we asked Rice to share the top barriers to black home ownership and how she felt they should be addressed. (Answers have been edited for length and clarity.)
Obstacles to black home ownership
According to Rice, the black home ownership gap in the US is supported by several factors:
The Effects of Invisibility on Credit
The biggest obstacle is access to credit, as people of color disproportionately live in “credit wastes,” says Rice. Instead of bank branches, there are payday lenders, check cashiers, and buy-here, pay-here lenders. Accessing loans from these providers makes people invisible or has artificially low credit scores.
The racial wealth is divided
Reis says that is the second major barrier Save money on a deposit. Americans of color did not have the same opportunity to build intergenerational wealth as their white counterparts. The prosperity gap prevents people from gaining access to home ownership.
The burden of student loan debt
Student loan debt prevents many color borrowers from accessing loans, Rice says. Because black families do not have access to wealth, they end up having to borrow more to go to college. Then the student loan debt prohibits black Americans from buying a home.
Limited affordable housing
Affordable housing across the country is limited, Rice says. After the Great Recession, many affordable homes were bought by corporate investors instead of being sold to owner-occupiers after foreclosure. There are also many homes that the housing industry calls “naturally occurring affordable homes,” which are homes less than $ 100,000 in value. However, lenders are reluctant to offer the small dollar mortgages needed to make the purchase.
Solutions to Increase Black Home Ownership
To bridge the gap among black homeowners, Rice suggests focusing on:
Access to credit
“We need to change the paradigm of financial services so that color consumers can access credit,” says Rice. Financial services companies have a role to play, for example by actively engaging consumers who are not yet in their orbit. She suggests developing new credit products for people who may have limited credit ratings or need to use alternative credit information.
Advance payment assistance
Rice recognizes that when people don’t have a down payment to buy a home, it is a huge barrier. “We’re trying to carry out President Biden’s campaign promise “We are working on different approaches so that people of color can use home ownership and other instruments for building wealth.”
Make better use of artificial intelligence
The technology used in the financial sector – automated drawing systems, Credit score systems, Risk-based pricing systems – obvious bias and discrimination against people of color, says Rice. The financial services industry will need a major investment in overhauling and redesigning the system to make it fair to all Americans. According to Rice, the NFHA has taken a leadership role in implementing its Tech Equity initiative to tackle bias in the financial services and housing sectors.
Enforcement of existing fair housing laws
Laws are only valuable when they are put into action, and Rice says, “We haven’t fully enforced the laws that are on the books, the Fair Housing Act, the Equal Credit Opportunity Act, and the Community Reinvestment Act. We don’t have to really reinforce enforcement of these laws. “
Rice highlighted the ECOA’s special loan programs, which encourage lenders to develop and design loan products to meet the needs of underserved groups.