Nearly half of more than 296,000 home loans issued in California in 2015 went to white homebuyers, while African-Americans secured just 3 percent, according to federal mortgage data analyzed by a Bay Area policy group focused on diversity and equity.

The report by The Greenlining Institute, based in Oakland, and National Community Reinvestment Coalition studied mortgages issued statewide and found communities of color in California, such as Latinos and African-Americans, don’t get home loans at the rates that whites do.

“Homeownership continues to be the most powerful way for families to build intergenerational wealth, and we see it as crucial to closing the racial wealth gap,” said Vedika Ahuja, lead author of the report.

Of the 296,757 home purchase loans issued in California, 48.5 percent went to white homebuyers, according to the report. Latinos got 21.2 percent of the home loans issued, and African-Americans secured just 3 percent despite making up about 6 percent of the state’s population. Asians were able to get 15 percent of the home loans in 2015, slightly more than their total state population.

The report looked specifically at home lending in Oakland, Fresno and Long Beach, ethnically diverse cities with low-income residents — and cities that are undergoing gentrification.

In Oakland, only 7 percent of the home loans in 2015 went to black households despite African-Americans making up 28 percent of the city’s population.

“It starts to reflect, what is kind of stirring but the words are not really said, which is that there is still institutional and systemic racism,” said Nikki Beasley, executive director of Richmond Neighborhood Housing Services, a group that helps low-income families get into home ownership.

Low rates of home ownership among African-Americans date back to the “redlining” racial discriminatory mortgage lending practices of the 1930s that denied black homebuyers financing tools based on race. The Federal Housing Administration, created in 1934, refused to federally insure mortgages to black people, and even to homebuyers living near black neighborhoods, thereby excluding African-Americans from home ownership and the opportunity to generate personal wealth through real estate.

Redlining was outlawed in 1968, but the effects still linger. Predatory lending targeting African-Americans with ballooning mortgages helped cause the 2008 housing market crash.

The city of Oakland sued Wells Fargo in 2015, accusing the Bay Area-based bank of targeting African-American and Latino residents with more expensive loans that caused many to lose their homes.

“The predatory practice of targeting people of color with subprime and unaffordable mortgages leading up to the Great Recession — we term that reverse redlining,” Ahuja said.

The report shows that five of the top 10 home loan lenders in California were non-banks. In Fresno, where Latinos were 47 percent of the population in 2015, nine out of the top 10 home loan lenders were non-traditional bank institutions. Beasley said online lenders are a great second resource for homebuyers, but their mortgage packages can come with hefty fees.

“They do a great job, but it’s an expensive loan to get, and we really need to make sure we have leveraged all other possibilities before taking them there because it’s expensive,” she said.

Stephanie Wiggins, 54, lost her home in the 2008 crash and has been renting in the Bay Area since then. She’s now living in Alameda. About four years ago, Wiggins was financially ready to get back into the housing market but couldn’t qualify for a loan.

“I was always getting ruled out or put in some sort of lottery,” Wiggins said. “It just felt very iffy — very chancy.”

Wiggins, a single mother who is African-American, said there were many barriers. She was told her student debt-to-income ratio was too high or that she didn’t live in the right area to qualify for a certain program. She had almost given up on trying to get a home loan until she and her sister attended a housing fair and met Beasley in November.

Wiggins was pre-approved for a loan and has her eye on a house in Solano County. It’s far from where she lives now and is about an hour commute to her job in Contra Costa County. But Wiggins said it’s spacious, new and in a safe community.

“Having the opportunity to own a home and build personal wealth is still helping my community,” she said. “I’m far but not that far, and I could still commute in an hour, and still go see people and participate in an event.”

Home Loans Harder to Get for Blacks and Latinos in California 27 December,2017Erika Aguilar

  • Erika please quit

    This is a ridiculous article. Has anyone ever thought that maybe they didn’t qualify for a standard low interest rate loan due to their potential credit score or debt load? Not saying that they all have low scores or tons of debt, however if the article actually included the detail that they have analyzed each and every specific transaction I think this is all a witch hunt. These are reasons why there is such a dividing line in the country. All of these frivolous accusations. And you speak of Asians obtaining 15% of home loans while Latinos are in the 21%and African Americans are 7% but no where in this article speaks to how Asians are being racially profiled. Erika Aguilar, please find a new hobby and a new job instead of attempting to stir a baseless accusation.

  • jskdn

    Erika conflates racial discrimination in the past with what may be reasonable, discriminating financial underwriting that keeps people from qualifying for a loan, the absence of which caused the great recession, damaged the lives of millions and made others rich producing nothing.

    “I was always getting ruled out or put in some sort of lottery,” Wiggins said.” Why wasn’t she given a loan? Was there any reason why that might have made sense? And what does she mean by “put is some sort of lottery?” Why not share what Richmond Neighborhood Housing Services is doing and any other factors that are enabling Wiggins to buy a house in the incredibly expensive Bay Area?

    What this kind of race and ethnic activism promotes is a return low underwriting standards. And it’s happening with Fannie Mae’s “HomeReady” and Freddie Mac’s “Your Path.” 3% down and even then the money for the down and closing cost can come from other sources. 3% down puts a buyer effectively underwater as it generally costs more than that to sell. The scheme is premised is endlessly rising prices. Do those at KQED think high, unaffordable to most, housing prices are a good thing?

    California elites, including the news media especially, welcomed mass immigration and the resulting demographics drove California’s population growth despite decades of native out migration from the state. And of course it was perfectly obvious that the people of the state in their various localities were unwilling to allow the housing required for that population. The result is completely predictable when supply is inadequate for demand. If people can’t get a loan, they can’t be part of effective demand to buy housing. Lowering the underwriting standards increases the demand and drives prices even higher. If people actually care about the lives those not owning real estate, then the they would support vastly increasing the supply in the market. They could support enforcing our immigration laws too, but the news media does everything possible to oppose even considering that.

  • Richie Tenenbaum

    Aguilar and other liberals love the practice of showing one percentage relative to the percentage of the population. They hold this up as some sort of prima facie discrimination. What she doesn’t say is that loan underwriting is purely a mathematical function: your income, your credit score, your existing assets. Never is race or ethnicity taken directly into account.

    “Underwriting standards equally applied have varied results” would be a better headline. This is garbage advocacy journalism, just baiting the reader with echoes of past discrimination. Erika Aguilar should interview a loan underwriter or at least have a decent understanding of how the process before writing half measures like this.


Erika Aguilar

Erika Aguilar is a housing reporter for KQED News. She joined the news department August 2017 after a short time producing independent audio projects. Erika covered criminal justice, breaking news and Orange County issues for KPCC public radio in Los Angeles, and wrote stories about the environment for KUT public radio in Austin.  She is a Texas native.

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