Federal Home Loan Bank of San Francisco Recommends Ways to Close Racial Homeownership and Wealth Gaps in US

By Mary Long, Special to The Post

The Federal Home Loan Bank of San Francisco (FHLBank San Francisco) released a package of recommendations to close the racial wealth gap in the United States.

The report, “Closing the Racial Equity Gap: A Call to Action,” is a result of a series of Homeownership Solutions Summits held in Arizona, California, and Nevada in 2022 and 2023.

More than 150 housing advocates, member institutions, and other stakeholders gathered to develop evidence-based ways to boost access to mortgage financing and sustainable homeownership for people of color.

Among the recommendations:

• Expand mandatory financial education and begin teaching the basics in grade school.
• Broaden the reach of down-payment assistance programs to include buyers who earn more than 80% of area median income.
• Encourage the widespread adoption of novel or modern building practices that can bring down costs without sacrificing safety or comfort.
• Provide support to elected officials in favor of higher-density zoning and less-restrictive land-use ordinances.
• Modernize credit scoring to bring more creditworthy borrowers into the housing finance system.

According to the Urban Institute, in 1960, the gap between Black and white homeowners was less than 27 percentage points.

By 2019, it was nearly 30 points, the widest spread ever. Today, only 45.3% of Black households own a home, compared to 72.2% of whites and nearly 66% of the U.S. population.

The Federal Reserve acknowledges that the average Black family owned about 24 cents for every $1 of white family wealth as of the first quarter of 2023, while the average Hispanic family owned about 23 cents for every $1.

“The inequities entrenched in the homebuying process cannot be eradicated by a single entity or a single solution. To make meaningful change in the industry, we must bring all stakeholders together to consider the options and formulate approaches that make the most of the expertise at hand,” said FHLBank San Francisco CEO Teresa Bryce Bazemore.

“Our Homeownership Solutions Summits provided an opportunity for discussion and collaboration, and we now have pages of practical and sustainable action items that, together, can help people of color gain equal access to homeownership and wealth-building,” Bazemore said.

The Homeownership Solutions Summit series, the first of its kind among Federal Home Loan Banks, is a continuation of FHLBank San Francisco’s equity approach, which includes a two-year, $1.5 million partnership between the FHLBank of San Francisco and the Urban Institute.

Their Racial Equity Accelerator for Homeownership collaboration has produced groundbreaking research on the effectiveness of alternative underwriting methods, the impact of student debt on Black homeownership, the use of mortgage reserve products to help sustain homeownership, and coming soon, how best to harness the power of artificial intelligence for equity in mortgage financing.

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