As we wrap up celebrations of Juneteenth, the country still grapples with the poverty that is the legacy of slavery, and Community Development Financial Institutions (CDFIs) are stepping in to help build wealth.
Data from the National Association of Realtors showed only about 43% of Black families own their home, compared with 72% of white families.
Crystal German, executive vice president of communications, development, policy, and impact for Self Help Credit Union, said they offer special mortgage terms for families who cannot afford a down payment.
“We are looking at doing 100% financing so that you don’t have to have as much to put initially into owning your home,” German explained. “We’re trying to remove the barrier of having generational wealth as an obstacle to owning your first home.”
Many CDFIs also offer savings programs at favorable rates designed to help people build credit. According to the Federal Reserve, approximately 60 % of African American adults have credit scores of 649 or below, which is on the low end of what is needed to qualify for a loan at a conventional bank.
Sarah Cervantes, California director of mortgage originations for Self Help Credit Union, said they also offer direct down-payment assistance.
“Self-Help offers $15,000 of down payment assistance, or $20,000 in high-cost markets, which would be like the Bay Area and Los Angeles,” Cervantes noted. “This down-payment assistance is available to these borrowers at a 0% interest rate. So we can finance their closing costs and reduce their overall interest rate.”
Shondra Tanner, South Carolina director of mortgage originations for Self Help Credit Union, said many CDFIs offer free financial education to their customers.
“Oftentimes, people are afraid to approach lenders, because they just don’t know anything about the process,” Tanner acknowledged. “I think being available in the community, and making programs available would help to close that racial wealth gap.”