NAREB to mortgage lenders: Use SPCPs to boost Black homeownership

SPCP programs are geared toward closing the homeownership and wealth gaps for Black Americans and other underserved communities

With Congress deadlocked on multiple high-profile issues, including raising the “debt ceiling,” it’s unlikely that any legislation that could help close the homeownership gap for Black Americans will be passed. In turn, Lydia Pope, president of the National Association of Real Estate Brokers (NAREB), is urging mortgage lenders to accelerate special purpose credit programs (SPCPs) to boost Black homeownership rates and help close the wealth gap between Black and white Americans.

“It’s disappointing that more mortgage lenders are not using these programs to increase homeownership, especially for those living in under-resourced communities,” Pope said in a statement. “America has a low rate of homeownership among Black families because of the overt racism in government and private sector practices and policies that limited the building of intergenerational wealth. SPCPs provide opportunities to balance the scale and put more Blacks on a path towards building wealth through homeownership.”

Special purpose credit programs are programs that offer unique standards and benefits geared toward making it easier for underserved populations to qualify for mortgage loans. Many lenders offer these types of programs, at least in some form, and the borrowers are required to meet certain criteria in order to qualify for the assistance offered by most SPCPs.

The goal of SPCPs is to increase access to mortgage loan financing by certain groups that have had a more difficult time with qualifying for loans due to their communities being historically underserved.

Homeownership has been described as a cornerstone of generational wealth, and the hurdles that Black Americans face when trying to enter homeownership only exacerbates that wealth gap — one that SPCPs could help to alleviate, according to the NAREB.

“This is an opportunity to use public policy for good, to expand opportunities for Black families to enjoy the American Dream of homeownership,” Pope said. “Homeownership is the major driver of wealth for Black families. By increasing homeownership, it will strengthen communities and expand family economic security.”

The 1974 passage of the Equal Credit Opportunity Act (ECOA) allowed for the establishment of SPCPs by both nonprofit and for-profit enterprises. In 2021, the U.S. Department of Housing and Urban Development (HUD) released guidance stating that SPCPs are allowed under the Fair Housing Act.

Earlier this month, Rocket Mortgage announced that it has expanded its special-purpose credit program, which offers a $3,000 credit for first-time homebuyers to use toward their down payment in select cities.

Pope lauded the move in her statement urging mortgage lenders to accelerate SPCPs.

“NAREB fully supports the Rocket Mortgage program and urge other mortgage lenders to step up and offer SPCPs. They can make a difference for those seeking approval for their mortgage,” Pope said. “NAREB is keeping track of which lenders are taking these bold and courageous steps to increase Black homeownership, and we will inform Black homebuyers which companies are addressing inequities and providing opportunities.”

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