Multi-Layered Approach Needed to Put Homeownership Within Reach of All Marylanders

Homeownership is a key source of wealth building and is often the foundation for one’s life. Unfortunately, the lack of affordable housing supply has placed homeownership out of reach for many people with low and moderate incomes, first-time homebuyers, and communities that have been historically and systemically locked out of homeownership. Compared with white households, Black Marylanders tend to have higher rates of cost burden – meaning they are having to pay more for housing than they can reasonably afford – and lower levels of homeownership with their homeownership rate being 26 points lower than white households in the state.

Earlier this month, President Joe Biden issued a proclamation, officially making June National Homeownership Month with the goal of raising awareness of the benefits of homeownership and the work that remains to achieve fairness and equity in access to affordable homeownership for all Americans.

Maryland is facing a housing shortage that is driving up prices to record highs due to construction cost and incompatible land use standards. Many Maryland homeowners continue to deal with high cost, ongoing maintenance and health and safety problems associated with older homes. According to the American Household Pulse Survey, 11% of Black homeowners in Maryland are currently behind in their mortgage compared to just 3% of white homeowners. The data suggest that, just as during the last housing crisis in 2008, Black and Brown Marylanders stand to be disproportionately harmed by any potential housing crash.

Homeownership is a major source of generational wealth. However far too often people of color are locked out of this opportunity to pass down generational wealth to their families due to the long-standing inequities in the housing system from disinvestment, redlining and the mis-valuation of homes in communities of color. All these things together have played a major role in locking out entire generations from the American dream and the opportunity to build generation wealth.

We also know that housing is directly related to many other factors such as health, quality of schools, healthy food, and stable employment. As such, it’s crucial that leaders continue to make safe and equitable housing a priority for all Marylanders. Whether purchasing or renting, we must ensure that affordable housing options are in place going forward for all Marylanders.

While there is still a need for state and local action to increase access to affordable housing, the federal government is in the best position to have the biggest impact.

President Biden recently announced two proposals aimed at making homeownership more accessible for marginalized communities:

• Ease the Burden of Housing Costs Action Plan
  • The plan is a set of legislative and administrative steps aimed at closing the housing supply gap within the next five years. HUD is also making more single-family homes available to individuals, families, and non-profit organizations.
• Interagency Task Force on Property Appraisal and Valuation Equity (PAVE) Action Plan
  • The PAVE Action Plan is aimed at dismantling racial bias in the home lending and appraisal process and promoting generational wealth creation through homeownership.

HUD and FHA have implemented other key improvements such as:

• Serving more first-time homebuyers and communities of color
• Preventing foreclosures for borrowers affected by the pandemic
  • In April, FHA added a new 40-year mortgage modification option for mortgage servicers to use in conjunction with its partial claim option to assist additional borrowers who are behind on their mortgage payments.
• Removing barriers to homeownership for those with student loan debt
  • Last summer, FHA updated its policy on student loan monthly payment calculations to remove homeownership barriers. The new policy bases the monthly payment on the actual student loan payment a borrower pays, rather than a percentage of the balance, more closely aligning FHA policies with industry standards. This change will have a major impact on communities of color since they disproportionately have high balance of student loan debt.
• Affirmed the use of special purpose credit programs
  • More than 50 years after the passage of the Fair Housing Act, access to security and wealth provided by homeownership remains persistently unequal. Part of the solution to that problem must be for lenders and others to find ways to extend credit to communities that desperately need it to start building equity. In December, HUD made clear that the use of certain Special Purpose Credit Programs to help address inequities in barriers to credit and homeownership is lawful under the Fair Housing Act. This is a tool that allows lenders to meet the specific needs of historically marginalized groups.
• Setting the stage for increased fair housing and lending enforcement and access
  • Last summer, HUD entered into a first-of-its-kind memorandum of understanding with the Federal Housing Finance Agency, marking a historic collaboration on fair housing and fair lending enforcement and oversight. The goal is to foster deeper collaboration between agencies on fair housing investigations and enable data sharing.

The federal progress on equitable homeownership is promising, but much more still needs to be done. In the coming years, Maryland policymakers should also focus on reshaping our state policies and investments to create equal opportunity for people of color. The long legacy of discrimination in the housing sector has created concentrations of poverty in certain communities and uneven access to affordable housing among households of color. We need policies that protect and promote equity in order to achieve more positive outcomes for all Marylanders, and we need to back up those policies with meaningful funding through our state budget.