The Pennsylvania Housing Finance Agency released a report on Wednesday that highlights the disparity in mortgage lending in the state and Philadelphia.
The agency, The Philadelphia Inquirer reported, intends to use the study’s findings to influence the industry to improve the lending process for Black homebuyers.
“We’re hoping [the report] will have some incremental influence on the industry and the lenders,” Robin Wiessmann, the Pennsylvania Housing Finance Agency’s executive director and chief executive officer, told The Inquirer.
The study examines the home-buying experiences of people of different races in Pennsylvania and found that Black people are significantly more likely to face an uphill battle to become homeowners than white people. In the report, the state-affiliated agency recommends steps to address disparities in mortgage lending.
“As we release this report, it’s important to note its discovery of differences in the home buying process that create barriers to homeownership for people of color,“ the authors of the report wrote. “The report demonstrates a persistent disparity that mortgage applicants of color experience getting credit and navigating the home purchase process as required by the mortgage lending industry.”
According to The Inquirer, the authors based their findings on mortgage-based data, the experiences of more than 200 clients of the Pennsylvania Housing Finance Agency network, and in-depth interviews with nearly 45 agency clients.
The Black homeownership rate in Pennsylvania, the Inquirer reported, was 43% compared with 73% for white homeownership, according to census data released before the pandemic. In Philadelphia, the percentages were 48% and 59%, respectively.
Black mortgage applicants typically face greater challenges in accessing loans compared with white applicants. According to Ira Goldstein, co-author of the report and president of policy solutions at Reinvestment Fund, “disparities in mortgage lending are about a lot more than disparities in mortgage lending,” he said.
“This is a complex, multidimensional problem that has historic roots that continue to manifest in families today,” Goldstein added.
Some of these factors include fewer financial resources, less familiarity with the homebuying process and a history of housing discrimination, per the Inquirer.
The report’s authors recommend one way to fix lending disparities is to offer programs for home buyers that help pay down payments and closing costs. They also suggest financial literacy and basic homebuying steps be taught in high school.
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