Over the last couple of months, I have traveled to places and visited with people as diverse as America. In Great Falls, Montana, and Itta Bena, Mississippi; in Manhattan, Oakland, Niagara Falls, and Las Vegas. Though at a glance it seems there’s not much to tie these places together, the financial crisis devastated many people in all of these communities, taking away their homes and life savings. A few misleading politicians continue to exploit it.
And though the crisis is “over,” in some ways, it’s hard not to be despondent. Walking past Great Falls’ city block of homeless providers, driving past Oakland’s violently burned Ghost Ship warehouse, bustling through a failing Penn Station or having a good meal in the shadow of the casino that will surely save Niagara Falls, I saw cities and people that have lost jobs, lost options and, in too many cases, hope. In places like Montana and Upstate New York, it’s not hard to understand why so many gambled on Donald Trump. If only for their economic realities, it’s surprising that Oakland, the Delta, and especially Vegas, did not. Working class people of all backgrounds have faced a nearly 40-year economic decline, and it has understandably left them looking for political statements that are both at odds with and targeted to their crises.
What once tied us together was a shared sense of opportunity and purpose, certainly since the end of World War II, and more inclusively since the Civil Rights, Voting Rights, and Fair Housing Acts of 50 years ago. The ideals and ideas of the Great Society or Martin Luther King, Jr., have, of course, never been fully realized. But many had long seen them as attainable.
Why we thought these ideals were attainable had a great deal to do with economic opportunity. Our parents were better off than theirs. We will be even better off than them. Our kids even more so… But no one really accepts this anymore.
The financial crisis that was driven by predatory and under-regulated lending threw sunlight on the failings of our financial systems. It worsened not just the chasm between classes, but the one between American dreams and their attainability. In previous decades, homeownership advanced the financial well-being of white working and middle-class Americans. The reasons why we were better off than the last generation was because that generation left us a little more than what they’d received from their parents. Intergenerational wealth played a huge role, but the methods for accumulating that wealth were largely off limits for African Americans and other communities of color. That chasm—between White and Black homeownership—had closed a bit before the crisis. The new loss of faith in homeownership imperils this for at least a generation.
Black homeownership rates, of course, started to rise in the 1990s, but lost ground during the recent crisis at a disproportionate rate. In fact, homeownership rates for Black people recently fell below their rate at the time of the enactment of the Fair Housing Act in 1968. Moving the needle now seems like a Herculean challenge, especially in light of the Trump Administration’s budget and the House’s latest legislative antics.
Yet, families and advocates persevere. Late last year, CFED internally launched a new homeownership strategy to at once go beyond and enhance our work in manufactured housing by raising the three stages of homeownership.
The first focuses on preparing people for homeownership. This includes identifying and expanding the most effective homeownership counseling programs. We also know that well-underwritten, high loan-to-value loans are no predictor of failure, so let’s lower the barrier to home lending through the best and most replicable downpayment assistance programs. Advocates need to identify planning tools for the first purchase through savings (including individual development accounts) and credit repair and credit building.
Second, we will work with partners to increase the availability of affordable housing. Lower-cost starter homes, for example, remain in short supply. We will pursue new and proven ways to increase and preserve the affordable housing stock through manufactured housing and other products, and work to broaden the reach of programs to lower the cost of entry to homeownership, such as shared equity programs, inclusionary zoning, and community land trusts.
Finally, if nothing else, the crisis taught us that if we don’t protect homeownership, it’s not much of an asset. Most of the crisis, of course, was driven by predators pushing refinancing schemes, especially on communities of color. New and future homeowners suffered as a result, as property values dropped and credit tightened. Therefore, the final part of our strategy focuses on reducing the risk of homeownership. Now that the Home Affordable Modification Program (HAMP) has expired, advocates need to aggressively explore life after HAMP, including the new offerings by Fannie Mae and Freddie Mac. Foreclosure prevention techniques must be at the heart of this, including high-touch servicing that can help address delinquencies before they get out of hand. We also need to develop effective ways to help families rebuild savings post-closings and, if appropriate, build equity faster.
The false narrative that affordable housing or the Community Reinvestment Act or lower-income families caused the financial crisis still echoes on Pennsylvania Avenue. It’s a narrative that ignores how ineffective regulators drove much of the crisis and, in fact, it has driven the House of Representatives to pass its awful Financial CHOICE Act.
Despite this, many of us still believe in homeownership, when done responsibly and sustainably. The above ideas aren’t new, but pulling them together in a collective, coherent way will push back against those who, like their predecessors of 80, 70, 60 and 50 years ago, would deny long-term stability to those for reasons more than just the color of their money.
It’s a big challenge, but its a big country. It’s worth pursuing solutions for all of it.