Tai Christensen of CBC Mortgage Agency: Black Homeowner Equity Takes Big Step in Right Direction

Tai Christensen is the Diversity, Equity and Inclusion Officer and the Director of Government Affairs for CBC Mortgage Agency, a national down payment assistance provider, and has 17 years of experience in the mortgage industry. She has been a loan processor, manager of a mortgage brokerage focusing on modifying loans for families facing foreclosure and manager of a law firm specializing in negotiating mortgage terms for families facing trustee auction dates. She can be reached at tai.christensen@chenoafund.org.

MBA NEWSLINK: How has Black homeownership historically compared to that of white homeowners?

Tai Christensen

TAI CHRISTENSEN, CBC Mortgage Agency: While I am fortunate to have a family that passed on the virtues of homeownership, my story is an exception. The reality is the Black homeownership rate has been far below white homeownership for decades, and the gap between them is about the same as it was when the Housing Rights Act was passed in 1968. What this means is that communities of color are composed of families who have historically never owned real estate and therefore have not benefited from wealth generated through housing appreciation.

NEWSLINK: How did Black homeownership fare last year?

CHRISTENSEN: If we base it on origination volume, then loans for Black borrowers jumped 38% last year, according to HMDA data reported by National Mortgage News. While that was lower than white borrowers, where originations rose 50%, it’s still good news.

A more positive metric recently was the median percentage gain in home equity in Black neighborhoods, which rose 197 percent from 2019 to 2021, according to a Redfin report. That was a higher increase than for any other group and a historic improvement from the Great Recession, when home values recovered more slowly in communities of color. The Redfin report also found that the median gain in home equity in Black neighborhoods was $59,000, while it was just $50,000 in white neighborhoods.

NEWSLINK: What do these latest numbers mean?

CHRISTENSEN: Obviously, the gap in homeownership between Blacks and whites shows that there’s still a considerable amount of work to do. But to me, these latest numbers are signs that the home lending industry is one step closer to a more equitable market. It’s great to see home values rising in both white and Black neighborhoods. Maybe it’s also a sign of progress that originators can build on.

NEWSLINK: What do you mean “build on?”

CHRISTENSEN: Owning a home is just the first step toward narrowing the wealth gap between Black and white households, which is also pretty significant. According to the Federal Reserve, the average white family has eight times the wealth of the average Black family. This means many Black Americans, especially first-generation homebuyers, don’t have access to generational wealth or have parents with the ability to help make a down payment on a home. Because homeownership is the primary vehicle for generating wealth for most American households, providing more equitable opportunities to own a home would go a long way toward narrowing this gap.

One way to do this is by expanding federal down payment assistance programs for first-time homebuyers, which is something HUD Secretary Marcia Fudge seems to support. Down payment assistance programs are particularly useful for borrowers who are otherwise safe credit risks but simply do not have access to down payment funds. In fact, last year, we discovered that half of buyers who received down payment assistance through CBC Mortgage Agency were racial or ethnic minorities, and more than one-third were first generation homeowners.

NEWSLINK: Aside from building real estate wealth, are there other benefits from the 197 percent increase?

CHRISTENSEN: Absolutely. The growth in home equity is not just about numbers. As home values rise, Black homeowners have the ability to access the equity in their homes either through a first mortgage refinance with cash-out or with a home equity loan that leaves their low-rate first mortgage intact. The proceeds can be used to pay off high interest rate credit cards or loans, thus improving a borrower’s financial standing and credit profile. They can also be used to make home improvements—and increase the value of their property even more—or put a child through college, among other things.

NEWSLINK: What does the report say about Black neighborhoods?

CHRISTENSEN: I think it suggests that many of the properties being purchased by Blacks are located in neighborhoods that were formerly redlined by lenders, indicating home values in these neighborhoods are starting to catch up with predominantly white neighborhoods.

NEWSLINK: So, this is a good thing for ending racial wealth disparity?

CHRISTENSEN: Well, yes, it is good if you were among the 44 percent of Black Americans who owned a home. But the other 56 percent of Blacks saw no benefits. It is here where mortgage originators can encourage and help those in low-income communities to take the journey to homeownership. For example, originators should be educating both prospects and existing clients about the value of building home equity. They can also educate themselves about all the down payment assistance programs that are available to borrowers. Obviously, there is still plenty of work to do before the racial wealth gap disappears, but we all have an opportunity to play a part in bridging the gap.

(Views expressed in this article do not necessarily reflect policy of the Mortgage Bankers Association, nor do they connote an MBA endorsement of a specific company, product or service. MBA NewsLink welcomes your submissions. Inquiries can be sent to Mike Sorohan, editor, at msorohan@mba.org; or Michael Tucker, editorial manager, at mtucker@mba.org.)