Industry Firms Collaborate to Help Expedite Application Process for Independent Contractors 

Three industry firms are collaborating to help streamline the process for agents to apply for Paycheck Protection Program (PPP) loans in the coming weeks, urging independent contractors to apply immediately before the March 31 deadline, or before funding for the program could potentially run out.

The three companies—Small Business Administration (SBA) banker Capital Plus Financial, Blue Acorn, which offers a system for submitting applications, and MooveGuru, providing a concierge team to help agents along the way—have created a 15-minute streamlined application process for the real estate industry.

The second round of federal loan funding to small businesses included $250 billion, and of that, about $128 billion is currently still available. Last week, the Biden Administration softened the requirements for PPP loans to include independent contractors, opening the opportunity to about 90% of the 1099 agents to qualify for the forgivable government PPP loan. The program is set to expire on March 31, unless it is extended.

“Agents need to submit their applications immediately,” a joint statement from the companies urged. “There’s also a chance that the $128 billion could run out. Take action today.”

Since the announcement last Wednesday, 90% of the real estate agents and mortgage loan officers that are 1099 independent contractors have qualified for between $5,000 and $20,833, even if their income did not decrease in 2020, the companies stated, highlighting the program’s simple underwriting terms: As long as the agent received a commission check in February 2019 as an independent contractor, did not draw any PPP loans in the first round of PPP and has a real estate license, they qualify.

Click here to apply now.

According to the companies, once the application is submitted, the review time is about 5 – 7 business days. When successfully approved, funds are direct deposited into the agent’s bank account, straight from the SBA and Capital Plus Financial.

Apply here before the March 31 deadline.  

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After Congress had rejected two earlier versions of the Civil Rights Act of 1968, commonly known as the Fair Housing Act, the third version appeared to be going nowhere prior to the April 4th 1968 assassination of Martin Luther King, Jr. It was that crystalizing moment and the resulting civil unrest that spread across the country, which led to President Lyndon B. Johnson signing the Fair Housing Act into law on April 11, 1968. It was the first time that Congress declared it illegal for private individuals to discriminate on the basis of race in the sale or rental of housing.

Today, more than half a century later we continue to experience social unrest and protests centered on issues of equality, equal justice and systemic racism in the midst of a pandemic with racially disproportionate impacts.

Let’s look at the wealth gap and consider that, in 1968, a typical middle-class black household had $6,674 in wealth compared with $70,786 for the typical middle-class white household, according to data from the historical Survey of Consumer Finances that has been adjusted for inflation. In 2016, the typical middle-class black household had $13,024 in wealth versus $149,703 for the median white household, an even larger gap in percentage terms that what it was nearly 50 years ago.

Now consider this: the net worth of a homeowner is 41 times greater than that of a renter.

Why focus on housing? For starters, housing, along with food and clothing, is the most primary of our basic needs. However, housing is so much more than that. In fact, Americans’ primary residences account for about 25 percent of their overall wealth, more than any other asset. Homeownership remains a cornerstone of the American Dream, helps build strong communities and drive the U.S. economy.

If homeownership helps provide both a stable foundation and a much needed economic tailwind for so many, we should be alarmed and concerned about the racial disparities in homeownership. In fact, according to the U.S. Census Bureau survey, the African American homeownership rate at the end of the second quarter was 47%. While this number represented the highest levels since 2008, it trails the 76% homeownership rate for non-Hispanic whites by 29 percentage points. This disparity fundamentally limits the ability of African American renters to build equity and long term generational wealth. Long term systematic renting also means that each year these renters are forced to pay both higher rent, in real dollars, and to commit an ever increasing percentage of their income to housing as rent often increase faster than real wages.

Given this gap in wealth equality and homeownership percentages, it helps us understand why 41 percent of Black-owned businesses have been closed by COVID-19, compared to just 17 percent of white-owned businesses according to research at the University of California, Santa Cruz. In reality, if you need $20,000 in order to keep the doors open and you have a net worth of $150,000, much of which may be in your home, you might be able to figure out a way to make it happen. If you are a renter and have a net worth under $15,000, it is nearly impossible.

While overt racism in housing has long since been illegal, the disparities in home ownership among African Americans perpetuates long standing inequalities in all areas of society. When the homeownership rate is equal for all races we will have achieved real progress towards “fair housing”.

CREDITS: Michael Scarafile / The Post and Courier

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FICO has been working closely with lenders and partners to provide awareness of reporting options.

We at FICO recognize the significant challenges faced by both borrowers and lenders in these extraordinary times. We’ve been working closely with lenders as well as our Credit Reporting Agency (CRA) partners throughout the COVID-19 pandemic to provide awareness of the various reporting options open to data furnishers, as well as how those reporting options can impact consumers’ FICO® Scores.

Many lenders are offering multiple options to consumers, including temporary deferred payment plans and/or placing loans in forbearance.

We have emphasized to data furnishers that while special comment codes (like AW for natural disasters or CP for forbearance) are an additional option for reporting a borrower’s situation, these are temporary codes that will only be reflected in the credit file for as long as they are being furnished, which is typically only while the extraordinary circumstances are in effect. There is an alternative approach that can better protect COVID-19-impacted consumers’ FICO® Score over the long term.

Therefore, as lenders are assessing how customers have been impacted by the COVID-19 pandemic, and how to report all key credit data fields in a manner that best reflects each customer’s situation, using special comment code alone should not be viewed as providing  consumers relief with respect to the FICO Score. Placing borrowers in a temporary deferred payment plan or in forbearance, along with reporting an account status as “current” instead of as “delinquent”, will permanently ensure that a borrower’s FICO® Score won’t be impacted by late payments related to the effects of the COVID-19 pandemic.

CREDITS: FICO

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Dispiriting. Disgusting. Disorienting. However one chooses to frame the events sparked by George Floyd’s killing at the hands of the Minneapolis police on May 25, the underlying cause is clear: America’s racial divide, a ragged, gaping, self-inflicted wound that has been allowed to fester for centuries, has poisoned the country.

At a time when medical professionals the world over are coming together and sharing resources to develop a vaccine for COVID-19, Americans can’t even come together to ensure people of color can receive decent schooling or not get murdered by the police. For the supposed leader of the free world, it’s a failure that’s as colossal as it is sad and ironic; a failure that is, by this point, taken for granted by the rest of the planet.

It’s clear that America’s racial problems are not going to be solved by its elected leaders. And they’re certainly not going to be solved on Facebook or Twitter, two companies that have made billions by pumping the internet full of racist bile and then licking their chops while the data rolls in. It’s going to take a grassroots, ground-up approach that forces people to have tough discussions and constructive interactions with the people closest to them – neighbors, friends, their professional colleagues.

Two people using that strategy to bring more diversity to the mortgage space are WFG Lender Services’s vice-president of national business development, Monique Winston, who also heads the Cleveland Realtist Association, and Tony Thompson, founder and CEO of the National Association of Minority Mortgage Bankers of America. MPA spoke to Winston and Thompson on Tuesday about what organizations can do to not only ensure a diverse workforce, but to provide opportunities for young people of color to enter an industry many of them have had little exposure to or positive experience with.

Rather than filter their thoughts through the mind of a white writer, MPA’s discussion with Winston and Thompson has been transcribed below, with some editing for length and clarity.

Mortgage Professional America: Monique, Tony, could you first talk a little bit about the organizations you represent?

Monique Winston, WFG Lender Services/Cleveland Realtist Association: I’m president of the Cleveland Realtist Association, the local chapter of the National Association of Real Estate Brokers. It was started back in 1947. At that time, it was a whole different climate – maybe – and there was a need to have an organization, not just from a standpoint of making sure minorities were represented in the real estate profession – which was critical, because at that time if you were African-American you could not be a part of NAR – but also from a homebuying perspective because we were dealing with redlining, overt discrimination, all those kinds of things.

I’ve had organizations reach out, very, very recently – and these are major financial institutions – and they said they need a diverse talent pool within their organization and a list of candidates to build from. They’ll say, ‘Monique, how do we get there? Do we go and do education within the high schools? Do we go to local colleges and community colleges? Do we go into the community centres?’ So we do all of that advocacy.

Tony Thompson, founder/CEO National Association of Minority Mortgage Bankers of America: NAAMBA as an organization is focused on two things: providing training, education and professional advice for women and minorities who are currently in the industry, and introducing and connecting college students and high school students to careers in the industry and providing them with financial literacy education.

When you look at the current state of the industry, primarily on the loan origination side, the average loan originator is a 53-year old white male. Every CEO in the mortgage industry has stated that we need more younger people, we need more diversity, but there was a lack of a vehicle to connect to the next generation and those who are currently in the industry.

MPA: Why do women and minorities require that dedicated training you mentioned? What does that training consist of?

TT: There has to be a recognition that a young Latino male or female will have different challenges than a white male or female in our industry. A young Indian or ethnic Indonesian person may have greater challenges or unique needs among their community that, from a diversity perspective, is important to recognize and acknowledge. What we’ve found, overall, is that when you talk about training and education, particularly with women or minorities, there has to be a recognition that they need a different support mechanism in terms of how they connect, the training they are provided as well as how you reach out to them to offer their services to the community in terms of originating mortgages.

MPA: How valuable is diversity to the success of a mortgage business?

TT: Diversity is a great thing for companies that don’t have it or want more of it, and if used appropriately, it can be a competitive advantage by allowing you to connect with people in your market place that you currently don’t connect with, thus making your business more successful, thus impacting and touching more people from a homeownership perspective as well.

MW: What companies realize is that diversity isn’t just the right thing to do. It’s the only option in terms of making sure you’re able to reach those communities. It makes good, basic business sense. This world is going to look totally different ten years from now, so in order to reach those consumers you have to make sure they see themselves in your organization.

And we’re not just talking about racial diversity. There’s diversity of age, there’s diversity of gender. All of these things bring diversity of thought. And that’s what you need. You need diversity of thought to tackle all of the things we’re seeing in today’s society.

And diversity’s just ‘having the party’. Once you get these people into your organization, how do you make sure they’re included? I think you have a real recognition of that by some of the financial institutions who are saying ‘We need your help.’

MPA: A lot of companies are making moves to illustrate their diversity now that the world is watching to see where they stand on race in America. Do you find that the companies reaching out to you are genuine in their desire to diversify their work forces, or is it just PR?

MW: What I articulate very clearly is, if you are truly desiring a diverse atmosphere, then I’m your girl. If you’re looking to look like you are, then I’m not your person. What I’m concerned about is, is that aspect for real? There have been those occasions where it’s more of a check-the-box mentality than an earnest desire to make a change.

MPA: Can you suss out that insincerity?

MW: The proof is always in the pudding. Initially, it all sounds good, but you’ll know who the real sincere players are by their actions. If you’ve set specific goals and you’re five years into your plan and you’ve had no change whatsoever, it won’t take long for those things to come to light.

MPA: What are some specific race-related issues affecting your particular spaces in the industry? Are there any potential solutions?

MW: A big one for me is the homeownership rate. If you look at the gap between black homeownership and white homeownership, it is greater today than it was 50 years ago. [The rate of homeownership among African Americans in Q4 of 2019 was 44% compared to more than 70% for whites.] It is greater today than it was before fair housing legislation was enacted. That’s a problem, and a lot of people don’t quite understand why that’s such a problem.

A lot of the things we deal with have an underlying economic factor to them. We know that homeownership is one of the fastest ways to build generational wealth. If I have access to homeownership, I can leverage that. I can leverage that to start a business. I can leverage that to send my kids to college.

On a national level, NAREB has something called 2Mn5, where it’s our goal to get two million black homeowners within the next five years. That’s something I’m particularly passionate about because it changes generations.

TT: Our goal at NAMMBA is to help make sure we can educate mortgage professionals to go out and create great experiences for the consumer so we can also have sustainable homeownership. Because putting people in homes is one thing, but making sure we help people stay in homes is also just as important to building a community.

Our focus is on helping individuals in this industry understand how to be a better practitioner, a better advocate and a better professional, while also realizing that the only way to change the homeownership rate is going to be an intentional focus over a sustained period of time. Just as it took the United States almost a decade to recover from the Great Recession, it is going to take us a decade to begin to change how diversity looks in this industry.

MPA: How would you rate the current level of diversity across the industry?

TT: When you look at the operations or servicing side, historically you’ve seen more minority and people of color own operations. What most people don’t know, is that single, African American females make up a large portion of employees on the operations side. The goal is how do you help those population groups grow and elevate their career?

MW: When we go into high schools, we take an appraiser, we take a title person with us, we take a real estate agent, we take a home inspector – all of these different facets of the real estate industry. You would be absolutely amazed at how many have never even heard of these as possible career options. That’s the next generation. If they’re not even exposed to these potential career opportunities, how are they going to take advantage of them?

We’re very intentional in going into high schools and saying, ‘Consider this.’ And when you think about it, how many of the careers that I just named may be careers they don’t have to go to a four-year institution for?

You have to be intentional. You have to be. That’s one thing Tony and I don’t shy away from, saying ‘We’re targeting this particular population,’ because we know there’s a need.

Readers wanting to support NAMMBA in its efforts are encouraged to donate to its #studentchallenge program, which will provide skills, tools and other resources to 50,000 young Americans entering the U.S. workforce.

CREDITS: Clayton Jarvis / Mortgage Professional America

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The coronavirus outbreak naturally has many real estate agents on edge. For most agents, face-to-face interaction — often with customers from out of town or even out of the country — are a regular part of day-to-day business. It also poses a conundrum when considering one of the industry’s most long-held
real estate marketing practices: the open house.

While avoidance — steering clear of open houses altogether — is obviously the best way to ensure your safety and that of your sellers, it could dampen your prospects and delay the sale significantly, not to mention your commission. If that doesn’t sound too appealing, there are some precautions you can take to
minimize the risk if you do host an open house or in-person showing.

How to protect buyers, sellers, and yourself

Agents Marianne Bornhoft and Kellie Parker both recommend taking a different approach to open houses. Instead of having open hours when buyers can come and go, spread potential buyers out in 15 or 30 minute increments. This gives you enough time to clean up and sanitize between visits, and it also keeps too many people from being on the property at once — something the Centers for Disease Control (CDC) cautions against.

Here are some other open-house precautions the agents recommend putting in place:

• Leave all lights on in the house for the entire event or showing. This keeps buyers and their agents from touching the light switches and possibly contaminating them.
• Set up cleaning stations. Have alcohol-based hand sanitizer available throughout the house, and keep soap, paper towels, and cleaning wipes on the countertop for everyone’s use. You might even consider handing out a travel-size sanitizer at the door.
• Offer booties at the door. Ask all visitors to cover their shoes with booties to avoid contaminating the seller’s property.
• Clean common surfaces between each buyer. Wipe down the doorknobs, cabinet handles, countertops, faucet handles, and other areas the visitors touched before the next one arrives. Do so again when your event comes to a close to protect your sellers.

According to Bornhoft, it’s becoming obvious that both agents and sellers are taking the threat of COVID-19 seriously. “Some people are waiting to list because they are elderly and have compromised immune systems,” she said. “I have two sellers that will be moving out of their house, so it will be vacant.”

The official word

Agents are encouraged to be open and honest about the risks of an open house during this time. Assess the risk based on your specific location and direct your clients to local and state health authorities for specific information about the severity of the risk in your area.

It is also recommended that you use alternative marketing tactics, like virtual and video tours. Consider asking your brokerage what alternative options and technologies you could use during this time. It could help both you and your community at large stay healthier in the long run.

CREDITS: Aly J Yale / The Balance

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The housing and mortgage industries can and should respond to George Floyd’s death, the disproportionate impact of the coronavirus and other issues the black community faces, according to the National Association of Real Estate Brokers.

“While we are grieved at the passing of yet another black man, George Floyd, at the hands of a few bad actors on the Minneapolis police force, we also recognize we are at war with a novel virus — COVID-19. Black Americans are simultaneously battling COVID-19, as well as the virus of racial injustice, the virus of discrimination, the virus of prejudice and the virus of inequality,” the group said in a statement. “This is a historic time. A new birth is taking place. In the future, you will be asked ‘What’d you do?’

“What’d you do at this critical time as black Americans were waging battles, both physically and economically, on multiple fronts? What’d you do when the homeownership gap between blacks and whites hovered around 30 percentage points?” the statement read.

NAREB has presented to the federal mortgage officials several housing finance proposals that would both help the black community and boost homeownership overall, said President Donnell Williams.

The association was founded in 1947 as a civil rights advocacy organization for black real estate professionals and consumers, at a time when discriminatory practices barred black people from joining Realtor associations. (While the National Association of Realtors pledged to support NAREB, it did not admit black people to its own organization until the 1960s.)

Since then, NAREB has played a key role in the development of many national fair housing policies.

Below is a discussion with Williams about some of the group’s recent proposals. His responses are excerpted and edited for length.

Some of the items in your association‘s call to action revolve around mortgage issues. What can the mortgage industry do?

Inside the Heroes Act was $75 billion of mortgage relief and $100 billion of rental assistance so people could actually make their rent payments. We need something like that with COVID-19 hitting our cities, especially where I am in the Northeast, New York and New Jersey or places like Los Angeles. We need some support.

If 44% of African Americans are homeowners — that’s the black homeownership rate in black America — that means 56% are damaged by a lack of rental assistance. So we’re going to be devastated when the forbearance goes away. With the unemployment rate still high, and that affecting mostly people making under $50,000 a year, they are not going to be able to catch up. I’m afraid that after the forbearance ends, they are just going to line people up for foreclosures and evictions.

Then there’s the loan-level price adjustments. They weren’t around in 2008, but after the debacle that year, the GSEs added these fees, which cost borrowers more money. Why are you tacking on fees for people that are probably already strapped? It wasn’t like that prior to 2008. We need to go back to that. I want Fannie and Freddie to say, we’re not charging those fees.

We also want expand HUD section 184. It allows Native Americans to do things like get a mortgage for a little over 2%. That was established in the 1980s. I can’t tell you how much help that would be to amend that section and add African Americans. What a stimulus that would be.

Have there been steps taken toward any of this?

We’ve spoken to everybody we could, and they’ve all listened. I’ll just say that.

You have a consumer education initiative called, “The House Then the Car.“ Is that about spreading awareness that purchasing the car first can interfere with a borrower’s ability to qualify for a mortgage in some instances, and part of efforts to increase the homeownership rate?

That is correct. On that site we also have a FICO estimator, a pre-purchase HUD-approved counseling class, and we have an online budget borrowers can use. The Urban Institute has a study out that says there are 1.7 million black millennials that are mortgage ready today that do not own a home. We have to own. That’s the bottom line. I firmly believe it.

Is that because studies show owning a home is helpful in building wealth?

Yes. We put out one called “The State of Housing in Black America.” That’s on our website. We put that out every year. We also designed something called Real Estate Opportunities for Seasoned Individuals that helps educate families about wealth retention. Our homeowners tend to be older, and we want to be able to bring the average age for a first-time buyer down and reach more millennials.

How could that be done, and what stands in the way of that happening?

In my opinion, education is a big key, and in some places you can’t buy a house because of redlining, or lack of access to the secondary market for foreclosed homes. We need to change that. Some people, their entire family line has never owned a home. I just sold a house to a woman like that. She just started a new job, bought a house and was able to move her mother in. Each time something like this happens, it is really important.

CREDITS: Bonnies Sinnock / National Mortgage News

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Lenders are concerned about a risk requirement imposed by a recent Federal Housing Administration measure aimed at opening up homeownership opportunities that might otherwise be threatened by coronavirus-related developments.

The FHA is temporarily willing to insure mortgages that go into forbearance due to COVID-19 hardships. But in exchange, lenders must agree to be on the hook for 20% of the original loan value if those mortgages go into foreclosure in the next couple of years.

Therein lies the rub, according to a letter sent to the FHA by several housing industry trade groups on Wednesday.

The move may not open the market up much if providing that indemnification discourages mortgage companies from taking on the risk and funding loans, according to the letter, which was sent in response to the agency’s request for feedback. As a result, they’re calling for the obligation to be removed.

“The excessive indemnification requirements in ML 2020-16 will effectively force lenders to impose higher credit and financial overlays to protect against risks that they cannot control during the underwriting process,” a coalition of business, consumer and minority trade groups said in the letter.

“We have seen a similar response to the GSEs’ recent policy to charge steep loan level price adjustments, and to stop purchasing certain refinance loans altogether, if a borrower seeks forbearance after closing but prior to delivery,” the groups added.

But in some ways the stakes are higher for mortgages insured by the FHA than for single-family loans purchased by the government-sponsored enterprises.

Under the terms of the coronavirus rescue package, both types of loans have been allotted forbearance upon request for up to a year if borrowers have a coronavirus-related hardship. While forbearances appear to be leveling off, there is concern that new loan performance problems could emerge in the future.

And FHA loans generally serve a lower-income and more financially vulnerable population than home mortgages purchased by the government-sponsored enterprises do. The share of loans with forbearance in mortgage-backed securities Ginnie Mae insures, many of which are FHA loans, is much higher than it is in the GSE conforming loan market.

“These overlays will severely limit access to FHA-insured financing for the borrowers who need it the most, disproportionately impacting low- and moderate-income families, first-time homebuyers and borrowers of color,” the trade groups said.

Among the housing industry signatories to the letter are the National Association of Realtors, the Mortgage Bankers Association and the National Association Home Builders. Other examples of organizations that signed the letter include the nonprofit Center for Responsible Lending and minority trade groups like the National Association of Real Estate Brokers and the National Association of Hispanic Real Estate Professionals.

The letter acknowledges that the indemnification is aimed at addressing financial risks from the coronavirus that everyone involved is affected by and trying to mitigate.

Specifically, the FHA wanted to address heightened risk that distressed loans will hurt the finances of its mortgage insurance fund in the event that forbearance fails to prevent broader loan performance issues.

“While we understand FHA’s desire to limit risk and exposure during uncertain times, we believe the resulting burden on the lender will have the effect of severely limiting access to FHA-insured loans for homebuyers,” the trade groups said in their letter.

CREDITS: Bonnie Sinnock / National Mortgage News

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Washington — The United States has been here before, staring into the deep chasm that divides white and black Americans.

It happened after cities burned in 1967, after Los Angeles erupted with the 1992 acquittal of police officers who beat Rodney King, after the 2014 police killing of Michael Brown in Ferguson, Missouri.

After those upheavals came talk of change — of reforming policing, yes, but also of expanding economic opportunity to black Americans who have been disproportionately left behind in one of the world’s richest countries. Yet despite big pledges and high hopes, economic progress has come slowly, if at all, for black America.

African Americans still earn around 60 cents for every $1 in white income. They have 10 cents in wealth for every $1 whites own. They remain more than twice as likely to live in poverty. And they’re about as likely to own a home as they were when Richard Nixon was president.

Now, demonstrators are out in the streets again, this time to protest what happened in Minneapolis to George Floyd, dead after a police officer pressed a knee into his neck for eight minutes and 46 seconds.

Once again, racial inequality underlies rage and despair, especially because the unrest coincides with an economic and health calamity, one that’s falling hardest, yet again, on African Americans.

“We’ve got a perfect storm,” said Cecelia Rouse, professor of economics and public affairs at Princeton University. “COVID is wreaking economic havoc” for African Americans.

Black Americans are far more likely than whites to die of COVID-19. They work disproportionately in low-paying service jobs — the ones that were slashed when restaurants and movie theaters closed as a health precaution and customers stayed away from hotels and airports.

“We’ve been blindsided by the pandemic,” said Imani Fox of the Washington community group ONE DC.

Black workers who remain employed are more likely to work as front-line workers in warehouses, grocery stores and takeout eateries — jobs that leave them exposed to the virus.

“People are mad as hell,” said Monica Lewis-Patrick, president of the community group We the People of Detroit. “We can’t be the wealthiest nation or declare ourselves the wealthiest nation in the world and still have these major inequities and disparities that are glaringly based on race.”

Rouse said she has reread portions of the Kerner Commission report, issued in 1968 to call for reform in the wake of the urban unrest of the late ‘60s. “It was so depressing,” she said. “What has changed?”

A month after the Kerner report, for example, Congress passed the Fair Housing Act, meant to eliminate housing discrimination. Assessing the act on its 50th anniversary two years ago, Margery Turner of the Urban Institute wrote that African Americans and other minorities continued to face discrimination, though the “most blatant” forms of bias had declined.

“We still live in starkly segregated neighborhoods,” she wrote, noting that the typical white Americans lives in a neighborhood that is 75% white and 8% African American; a typical black American lives in a neighborhood that is 35% white and 45% black.

The coronavirus recession is especially disheartening because African Americans finally seemed to be making headway in the aftermath of the Great Recession of 2007-2009. The unemployment rate for black Americans hit a record low last fall. And black wealth, decimated by the financial crisis of the late 2000s, had in recent years outgrown white wealth.

Then came COVID-19.

“When something goes wrong for all American workers, it’s going to disproportionately affect African Americans, who are often the most fragile in the economy,” said Democratic Sen. Cory Booker of New Jersey.

Amid the anger and anguish is optimism that policymakers will use this moment to find ways to narrow the economic gap between black and white Americans. Among the hopes is that political leaders can deliver reforms to America’s economic system: Paid sick leave. A higher federal minimum wage. Perhaps even direct payments to the needy — test-run, perhaps, by the $1,200 stimulus checks the government sent to many Americans as the economy shut down in the face of the pandemic.

But the United States has had watershed moments before. And the big changes didn’t come.

Here’s a look at America’s economic racial divide and how it has and hasn’t changed after decades of protests:

Income

From 1968 to 2018, median income for black households, adjusted for inflation, rose 37% from $30,155 to $41,361. In percentage terms, that outpaced the 31% growth in household income for whites (from $51,138 to $66,943), according to the Census Bureau. But black households still earn just 62 cents for every $1 earned by white households. The disparity was slightly larger in Michigan, 57 cents for every $1, according to the Census Bureau.

The income gap remains wide even though African Americans have vastly upgraded their educational attainment: The proportion of black Americans with a high school diploma has surged from 54% in 1968 to 92% in 2018. The share with a college degree rose from 9% to 23% over that period, according to government figures compiled by the Economic Policy Institute. In Michigan, 25.9% of African Americans have a college degree, compared with 41.6% of whites, according to a 2019 study by The Education Trust.

Yet black people are still more than twice as likely as whites to live in poverty. The white rate has barely budged at around 10%, but blacks’ poverty rate has dropped from 55% in 1959 to 35% in 1968 to 21% in 2018 — 27% in Michigan. The official poverty rate may understate African Americans’ progress because it excludes the effect of non-cash government programs such as food stamps and Medicaid.

Jobs

The unemployment rate for African Americans has typically hovered around twice the rate for whites. But beginning last year, the record-breaking economic expansion that began in June 2009 had finally begun to pay off for African Americans. Their jobless rate dropped from 16.8% in March 2010 to an all-time low of 5.4% in August last year.

That progress ended abruptly once the coronavirus recession wiped out tens of millions of jobs in March and April. Black workers, disproportionately laboring in low-wage service jobs, were less likely to be among the fortunate: The office workers who could keep their jobs while working from the safety of home. African Americans were likelier to either lose their jobs or to work as essential front-line employees who are more vulnerable to the virus.

On Friday, the government issued a surprisingly upbeat jobs report for May: The national unemployment rate unexpectedly dropped from 14.7% to 13.3%. But the jobless rate for African Americans ticked up, from 16.7% to 16.8%, the level where it had been 10 years earlier.

Wealth

Black Americans face an even bigger long-term problem than lagging incomes and higher unemployment. They have struggled to build wealth – home equity and investment portfolios – that could be tapped in times of need, used as collateral for loans to start a business or passed on to children.

“Income helps you pay your bills,” said Olugbenga Ajilore, senior economist at the liberal Center for American Program. “Wealth moves you from poverty to the middle class to the upper class.”

The median black family has wealth of just $17,200 — perhaps enough to buy a car — versus $171,000 for the median white family. The wealth gap persists even for African Americans in the top 10% of U.S. incomes: Their wealth comes to $343,160, less than one-fifth of the $1.79 million for whites in the top 10%, according to government numbers compiled by the Brookings Institution.

One ongoing culprit was the housing bust of the late 2000s. Commerce Department figures compiled by the Urban Institute show that black homeownership rose from 41.8% in 1970 to 47.3% in 2000 before being swept away by the financial crisis and the ensuing recession. As of 2015, black homeownership was 41.2% – lower than it had been 45 years earlier and far below the 71.1% for whites.

In February, researchers at the Brookings Institution reported other reasons for the wealth deficit: African Americans inherit far less money than whites. Even those who become top earners are likelier than whites to fall out of the ranks of the rich. And they are more likely to have to provide financial help to friends and family.

As a Democratic presidential candidate, Sen. Booker pushed a plan for “Baby Bonds’’ to provide $1,000 to every American child at birth. After that, they would receive up to $2,000 a year, depending on their family income. The idea would be to create a nest egg that could eventually be used to finance a college education or buy a home.

Bradley Hardy, a professor in American University’s School of Public Affairs, said that researchers and activists are working on plans like Booker’s to narrow the divide between black and white Americans, between rich and poor.

The current protests could provide momentum for those efforts.

“It’s absolutely an opportunity,” Hardy said. “And, yes, it could be squandered.”

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(TriceEdneyWire.com) – As the U. S. House of Representatives awaits the political fate of another multi-trillion dollar coronavirus relief bill, called the “Heroes Act”, Black Wealth 2020 (BW2020), a national catalyst for economic justice for African-Americans, is pressing Congressional leaders to unify for equity for the millions of pandemic victims who have yet to receive it.

“Each of our respective national organizations is comprised of memberships who are struggling to adjust to the realities of the COVID-19 pandemic. Though the members of this coalition have made every effort to guide their members to resources designed to help them navigate stimulus programs like the Payroll Protection Program, our organizations see the need to implement equitable and transparent programs that help disadvantaged communities weather this unprecedented storm,” states a letter from BW2020, primarily addressed to House Speaker Nancy Pelosi (D-Calif.), Senate Majority Leader Mitch McConnell (R-Ky.), House Minority Leader Kevin McCarthy (R-Calif.) and Senate Minority Leader Charles Schumer (D-N.Y.).

The letter states that the previous CARES Act (PPP), was worthy of applause for its “valiant efforts by members of Congress.” But many “businesses in the minority community were not able to receive” equitable financial relief.

Among a string of benefits that could significantly impact Black people, the Democratic-led $3 trillion proposal would provide $900 billion in federal funding to states and cities; another round of stimulus checks and possible expansion of unemployment claims.

But the bill passed the House along close partisan lines 208-199; so political observers doubt that it will make it through the Republican-led Senate any time soon if ever. Senate leaders say it’s too much money for the deficit. They were expected to take it up after Memorial Day this week.

Senate Majority Leader Mitch McConnell (R-Ky.), has called the House bill “an unserious product” and President Trump, who would have to sign it, called it “dead on arrival”. But Senate leadership has indicated that they do see the need for more relief and stimulus; therefore, members could significantly alter parts of the bill. If the Senate passes a marked-up version of the bill, there would still be time to negotiate needed improvements through a Conference Committee, which is made up of members of the House and Senate.

Black Wealth 2020 comprises major Black organizations with thousands of members in banking, business and home ownership. “We are unified in a common goal to shape a black economic policy agenda around three pillars: promoting black owned businesses, black homeownership and black owned banks,” the letter states.

The BW2020 letter makes a plea for bi-partisanship despite the drawback from Senate Republicans.

“The bill should have bi-partisan support because ours is an economy that depends heavily on consumer suspending. When Black and brown people in America have less to spend, the adverse ripple effects will eventually cost everybody in the country,” said Michael Grant, former president of the National Bankers Association, a Black Wealth 2020 founder, in an interview.

Ron Busby, president/CEO of the U. S. Black Chamber Inc., says Republicans must beware of the long-term effect of COVID-19 that could affect the economic principles that they espouse as being important to their agenda.

“We’re about to lose 35-40 percent of Black-owned businesses in America due to the pandemic. That’s a projected outcome. So, if this administration is truly concerned – and our president has been touting the unemployment numbers for Black people – then he must address the salvation of Black businesses.”

The letter was copied strategically to Treasury Secretary Steven Mnuchin and key committee leaders in the House and the Senate; including the House Ways and Means and Banking Committees and the Senate Appropriations and Finance Committees.

In a nutshell, among other new policies, the letter suggests the following:

• A policy that would require credit bureaus not to report late payments on all credit reports for three months and a required erasure of late payments from credit reports for the same period that have already been filed.
• A fund that would be released to banks from which individuals could redeem up to $600 to cover one month’s payment of a bill with proof of the bill they are attempting to pay.
• The establishment of a $25 million Home Ownership Assistance and Outreach Program through HUD.
• Add $100 million to the Technical Assistance and Outreach Grants through the Minority Business Development Agency.
• Establish Micro Enterprise Grants through the Economic Development Administration for the many small businesses who have less than 20 employees or are even sole proprietors and do not have access to as many resources as their larger counterparts.
• Add $1 billion to the Community Development Block Grant program earmarking those funds to help the most distressed neighborhoods.
• Expand HUD Section 184 to include African-Americans (provides 2 percent interest rate residential mortgages for FHA).
• Introduce and support the American Dream Down Payment Act. This bill establishes a down payment assistance program similar to the 529 college savings program.

The letter was signed by Grant, Busby, and other principals of the following organizational members of Black Wealth 2020: The National Association for Equal Opportunity in Higher Education (NAFEO); National Association of Black-owned Broadcasters; HomeFree-USA; National Association of Real Estate Brokers (NAREB); National Association of Securities Professionals; and the Collective Empowerment Group Professionals.

According to the Joint Center for Political and Economic Studies, the following are among the benefits of the proposed “Heroes Act” that significantly impact Black people:

• Economic Support for Individuals: Attempts to provide economic relief to families by extending the weekly $600 federal pandemic unemployment compensation supplement through January 2021.
• More stimulus: A second round of direct stimulus payments of up to $1,200 per person and $6,000 per household to an expanded set of families. The bill also increases the maximum Supplemental Food Assistance Program (“SNAP” or “food stamp”) benefit by 15 percent, waives work requirements for SNAP benefits, and provides additional funding for child nutrition programs and the Special Supplemental Nutrition Program for Women, Infants, and Children (WIC).
• Assistance to impacted renters and homeowners: $100 billion to support low-income renters avoid eviction, $75 billion to provide homeowners with direct assistance for mortgage payments and other housing costs, and $11.5 billion for housing and health services for people experiencing homelessness.
• Subsidies for testing and health Care: $75 billion for testing and contact tracing, and $100 billion to hospitals and health care providers for expenses resulting from the coronavirus.
• Black Businesses and Access to Capital: Directs additional resources to community development financial institutions (CDFIs) and minority depository institutions (MDIs).
• Demographic Data: Requires demographic reporting by the SBA on PPP loans, and by HHS on COVID-19 cases in nursing homes.
• Digital Divide: $4 billion to expand high speed internet access to those who cannot afford it, and another $1.5 billion to expand internet access to students and library patrons.
• HBCUs: $1.7 billion for HBCUs and Minority Serving Institutions hit disparately by hardships due to the Pandemic, including $20 million for Howard University, and authorizes and prioritizes grants to HBCU medical schools.
• Environmental Justice: $50 million to the EPA for environmental justice grants to study or address disproportionate impacts of COVID-19 in communities.

“The Heroes Act is already an essential bill with significant offerings that will at least move America closer to the sorely needed relief during this moment of untold suffering around the nation and world,” said Grant. “We are hoping that the powers that be will set aside partisanship to allow the necessary aide to flow amidst this great disaster.”

CREDITS: The Charleston Chronicle

The post In Letter to Congress: Black Wealth 2020 Sends Plea for Unity in Pandemic Relief appeared first on National Association of Real Estate Brokers.

As NPQ has noted, the federal government has regularly used the pandemic as cover to surreptitiously implement unpopular policy changes. In March, this meant rolling back mileage rules for cars. This month, it means rolling back rules that promote bank investment in low and moderate-income communities, and especially communities of color, even if the rhetoric of modernization is employed to cover its tracks.

Yesterday, the Office of the Comptroller of the Currency (OCC) released its final rule to “modernize” the Community Reinvestment Act (CRA). The rule was pushed through by director Joseph Otting literally days before he plans to step down from his position.

A silver lining is that the changes, detailed in a 372-page report, “will apply just to national banks and thrifts after other agencies declined to support the reforms,” according to Brendan Pedersen of American Banker. However, the OCC oversees banks with about 68 percent of all banking assets in the US, or $12.4 trillion.

The rest is overseen by two other federal regulators, the Federal Reserve and the Federal Deposit Insurance Corporation (FDIC), both of whom retain the previous CRA rules. The Federal Reserve has refused to participate in the rule-making process since it was initiated last December. The FDIC dropped out mid-process.

As NPQ wrote in February, the rules changes convert a set of context-dependent qualitative and quantitative tests into a single bank-wide ratio. In particular, the weakening of community-specific standards means that accountability is vitiated because the ability of community groups to challenge bank ratings is much diminished.

As NPQ has noted, once the COVID-19 pandemic hit the US, a number of actors petitioned for a moratorium in the rule-making process. For example, in a March 30^th letter, Independent Community Bankers of America CEO Rebeca Romero Rainey “urged financial regulators to suspend non-coronavirus-related rules to allow banks to focus on the fallout from the pandemic.”

In her letter, Rainey notes, “Combating the COVID-19 crisis demands the full attention and all available resources from the public, from state, local, and federal government entities, as well as all industries, including the vital financial services industry. Not only are financial institutions impacted, but the voices of those institutions are also engaged in this all hands-on deck reality.”

Andrew Ackerman of the Wall Street Journal observes, “Banks were generally lukewarm to the community-lending overhaul, despite unusually direct lobbying of bank chief executives by Mr. Otting. Since the coronavirus pandemic hit, banks have urged Mr. Otting to delay action as they grapple with the economic downturn.”

The pleas of Rainey and other bankers seemed to have greatly influenced the FDIC. In explaining why the FDIC decided to keep its rules as-is at this time, FDIC Chair Jelena McWilliams observed that the FDIC’s focus is elsewhere, saying, “The FDIC recognizes the herculean effort community banks are making to support America’s small businesses and families during this challenging time and encourages financial institutions to work constructively with borrowers affected by COVID-19.”

The speed with which the agency has pushed through its rule changes was unusually rapid. “Only 41 days have passed since the rule’s comment period ended in mid-April. By comparison, the final version of the CRA’s last reform effort, in 1995, was published 164 days after its comment period ended,” writers Petersen.

The OCC’s final rule did make some concessions to the 7,400 comments it received, many from community groups. For example, a rule that would allow a bank to meet benchmarks in only 50 percent of the assessed areas and still pass a CRA exam was changed to 80 percent. Still, mostly the OCC pushed ahead with its desired changes. At one point in the report, the regulator plainly stated, “Although commenters disagreed with the approach outlined in the proposal, the agency ultimately agreed with the minority of commenters who expressed support for the proposed framework.”

In a statement, National Community Reinvestment Coalition CEO Jesse Van Tol laid out the high stakes: “The timing is shocking, in the middle of a pandemic that has been hardest on lower-income communities this law is supposed to protect. What an insulting and cruel moment to unleash new rules that will in some cases help banks to do less for some poor communities and communities of color. Those are the communities hit hardest by COVID-19.”

CREDITS: Steve Dubb \ NPQ (Non Profit Quarterly)

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