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INSURANCE

CoreLogic Unveils New Discovery Platform

July 6, 2022 by Editor

CoreLogic has announced the launch of Discovery Platform, a cloud-based data exchange and property analytics ecosystem. Powered by the industry’s first integrated property identifier, CoreLogic’s CLIP ID, and built on more than 50 years of data spanning 99.9% of U.S. properties, Discovery Platform provides a comprehensive property analytics solution.

The platform enables businesses —including property and real estate technology (PropTech/ReTech), mortgage lenders, marketers and insurance firms— to discover, integrate, analyze and model property insights to make critical business decisions faster.

Enterprises have been investing heavily in data science to solve problems and predict outcomes across every aspect of their business, from revenue forecasts to lead generation and everything in between.  They often spend significant time and resources managing this data and little time translating it to inform and improve business outcomes.

CoreLogic’s Discovery Platform simplifies this challenge through:

Seamless data integration: Users can easily integrate their own business objectives and data with CoreLogic’s data assets. While most data exchanges rely on generalized data sets, CoreLogic’s CLIP ID provides more granular information at the property level to help businesses derive more accurate business insights based on the most current market landscape.

A complete suite of analytics and modeling tools: Organizations have access to a suite of leading analytics and resources such as data modeling and visualization tools, all available within a secure digital workspace that can be used to extract and categorize insights.

Connected workflows: Data can be easily exported and integrated into external operational platforms to streamline workflows between data analytics teams and business decision makers to improve efficiencies and drive business outcomes faster.

“As the industry is increasingly leveraging data science and analytics to understand, improve and grow their businesses, it has never been more important to get the data strategy right,” explains Patrick Dodd, President and CEO of CoreLogic. “By combining best-in-class data, enhanced analytics, and cross-functional collaboration capabilities into a unified solution, the CoreLogic Discovery Platform allows enterprise leaders to gain insights and integrate into their business activities faster than ever before.”

With CoreLogic’s Discovery Platform, businesses can solve use cases such as:

  • Lead Prospecting and Qualification: Identify and screen potential customers based on property or loan characteristics, real estate or loan transaction events, estimated equity or CoreLogic propensity models.
  • Market Share and Competitive Analysis: Analyze lending market share by geography or portfolio type and conduct competitive analysis on key competitors.
  • Risk Analysis: Assess risk of properties, including default risk, home price risk, hazard risk (e.g., flood, wildfire) and reconstruction cost risk.
  • Retention Modeling: Use CoreLogic’s propensity models to identity at-risk customers and understand where lost customers went.
  • Customer Profiling & Predictive Analytics: Build customer profiles based on key property-related characteristics. Predict behavior based on trends and forecasts of the underlying property attributes (e.g., home price appreciation, new construction, etc.).

To learn more about CoreLogic’s Discovery Platform, click here.

Originally Appeared Here

Filed Under: dsnews, INSURANCE, INVESTING, NEWS & TRENDS

PropTech Aims to Bring Efficiency to the Market

July 6, 2022 by Editor

PropTech, or the amalgamation of FinTech and real estate, has been a growing trend recently with the word popping up in conversation more and more often. The ultimate goal of PropTech is to make real estate transactions more efficient, leading to savings for originators, and faster processing and closing times. 

Knowing this, Citi Global Perspectives & Solutions (Citi GPS), a part of Citi Bank, released a first-of-its-kind report on the emerging PropTech industry as part of its “Home of the Future” series exploring where the trend currently stands and where it may go from here. 

The report ultimately found that this segment is ripe for growth. Much like when home prices went online in the 2000s and offered more information to buyers, there are still areas of the homebuying process, such as securing a mortgage and insurance, that are largely walled-off from the general public and are the likely candidates for future PropTech growth. 

“The process of buying a house is pretty painful with the large amount of paperwork. And while some frictions in the buying process are healthy, there is a big opportunity to streamline things,” noted Roger Ashworth, Head of U.S. Non-Agency MBS Strategy. “That’s where PropTech comes in – to look for those efficiencies in the market.” 

Other important notes the report covers on the move towards a frictionless housing market are: 

  • Innovation is happening in terms of business models as well, with the rise of home equity investment contracts, iBuyers (a company that uses technology to make an offer on your home instantly) and institutional single-family rentals (SFRs)  
  • Home equity investment contracts could deliver double-digit returns for co-investors of a property, while at the same time helping consumers tap some of the record-high equity in the housing market  
  • iBuyers purchase homes for resale and offer a variety of services to home sellers from offer pricing to renovating. 
  • Institutional single-family rentals (SFRs) make up three percent of the SFR market and are poised for growth. 

Click here to view the 52-page report in its entirety. 

Originally Appeared Here

Filed Under: BUY HOME, dsnews, INSURANCE, NEWS & TRENDS

Federal Title & Escrow recognized by WFG

June 29, 2022 by Staff Reporter

Federal Title & Escrow Co. recently accepted the Mid-Atlantic Region’s “3E Remitter Award” from WFG National Title Insurance Co. The annual award recognizes title companies in the region with the top performance score, which is determined by timeliness, accuracy and consistency of remittance delivery.

“We strive to build a more proactive, efficient and streamlined process on all ends of the real estate transaction, including proper policy remittances,” Federal Title Controller and Disbursement Coordinator Sanam Geramifar said in a release. “This is a proud moment because our team’s efforts were recognized and celebrated. Also, I love that this award emphasizes the importance of being environmentally friendly.”

WFG Vice Presdient, Mid-Atlantic Agency Andrew Hooper visited Federal Title to congratulate members of the team and present the award.

“The team at Federal Title is among the best in the business,” Hooper said. “They are consistently ahead of the curve when it comes to technology and workflow, and they embody WFG’s vision of taking time and cost out of the real estate transaction. All around, they are a pleasure to work with.”

Originally Appeared Here

Filed Under: INSURANCE, the title report feed

What More Can Be Done To House the Homeless?

June 29, 2022 by Editor

Working to address the homelessness crisis throughout the country, the Urban Land Institute (ULI) has released a new report investigating how the real estate community is working to address this crisis on a nationwide scale. 

Overall, the report shows how to support people experiencing homelessness through “creative housing solutions” and collaborations with community organizations, with the ultimate goal of providing abundant affordable, and high quality housing for affected and at-risk populations. 

According to numbers from the U.S. Department of Housing and Urban Development, 2020 was the fourth year in a row that experienced a higher homeless population than in the year past. The report goes on to say that homelessness should be treated as a systemic issue that necessitates the involvement and collaboration of the government, the private sector, philanthropic organizations, health and social services, faith-based organizations, and the public. 

In an effort to better inform players at every level, the ULI’s report offers housing case studies, applicable lessons, and a blueprint that can be used at the community level that shows how the development community can be an active partner in addressing homelessness. 

“More than ever before, homelessness is being driven by rapidly increasing housing costs, and the public and private sectors must work together both to meet the needs of the unhoused and to prevent more households from falling into homelessness,” said Christopher Ptomey, Executive Director of the ULI Terwilliger Center for Housing. “This report offers creative models and examples of how the real estate community is effectively leveraging its housing development, management, investment, and financing expertise to enable cities to overcome the growing challenge of homelessness.” 

Key takeaways from the new report include: 

  • Housing is important, but social services are essential: Housing is an essential first step in addressing homelessness, but it is not a solution in and of itself. Comprehensive social services are a critical second component. Delivering one without the other offers little chance of successfully tackling the crisis. 
  • Novel, creative solutions are needed: Nowhere is the need for innovation more evident than in seeking to address homelessness. Two areas of focus are cost-effective construction methods and non-governmental funding sources. Private companies — both in real estate and in other sectors — have a vital role to play in the latter. 
  • All segments of the community must play a role: Homelessness affects real estate, health care, social services, education, economic development, and more. Community collaboration is essential, particularly among the private and public sectors. The real estate sector is obligated to provide cost-effective housing, and it is incumbent on governments to pursue bold policies that allow for more housing for people of all income levels. 
  • Homelessness is a multifaceted issue, but in many cases links back to economics: Whether because of a lack of affordable housing, low wages, unexpected expenses, loss of employment, illness, lack of insurance, or a domestic issue, homelessness can be a result of economic stress. 

The full Homeless to Housed report is available on ULI’s Knowledge Finder platform. 

Originally Appeared Here

Filed Under: dsnews, INSURANCE, NEWS & TRENDS

Senate Committee Examines the National Flood Insurance Program

June 29, 2022 by Editor

The U.S. Senate Committee on Banking, Housing, and Urban Affairs recently held the session, “Reauthorization of the National Flood Insurance Program: Administration Perspectives.”

Sen. Sherrod Brown, Chairman of the Senate Banking Committee, and Ranking Member Patrick J. Toomey welcomed David I. Maurstad, Federal Emergency Management Agency Associate Administrator for Resilience (Acting) and Senior Executive of the National Flood Insurance Program (NFIP).

The NFIP provides more than $1.3 trillion in coverage to nearly five million homes and businesses in over 23,000 communities. The NFIP provides flood insurance to property owners, renters, and businesses, and having this coverage helps them recover faster when floodwaters recede.

Natural disasters and climate risk events such as flash flooding in West Virginia and Alabama; flooding in Montana and Yellowstone National Park; ice jam flooding in Alaska; heavy rainfall flooding in Arkansas and Oklahoma; and heavy rain, snowmelt and ice jam flooding in North Dakota and Minnesota have already impacted thousands of homeowners this year, well before hurricane season has begun.

FEMA personnel are already preparing for the 2022 Hurricane Season, expected by The National Oceanic and Atmospheric Administration to be above-normal for activity, as CoreLogic’s recently released 2022 Hurricane Report—which analyzes hurricane and storm surge and wind risk exposure for single-family residences (SFRs) and multifamily residences (MFRs) along the U.S. Gulf and Atlantic Coasts—found that nearly 7.8 million homes with more than $2.3 trillion in combined reconstruction cost value (RCV) are at risk of hurricane-related damages this upcoming season.

On September 30, 2022, the NFIP’s statutory authority to sell and renew flood insurance policies is set to expire. Since the NFIP’s last multi-year reauthorization expired on September 30, 2017, the NFIP has experienced several short-term extensions and three brief lapses. The short-term extensions have been found to be disruptive and cause existing and potential policyholders to lose confidence in the NFIP.

“The National Flood Insurance Program—or NFIP—was last reauthorized on a long-term basis in 2012,” said Sen. Toomey. “That reauthorization expired in 2017. Congress has repeatedly reauthorized the program on a short-term basis—21 times to be exact—that’s no way to run a railroad. So, I’m ready to work with my colleagues on a long-term NFIP reauthorization that reforms this program.”

Testifying on behalf of FEMA, Maurstad is a veteran emergency manager and advocate of building a culture of preparedness across the nation, with 40 years of experience in disaster resilience and the insurance industry. As Senior Executive of the NFIP, he led the largest single-peril insurance operation in the world providing more than $1.3 trillion in flood coverage to more than five million U.S. policyholders.

During his tenure with FEMA, Maurstad has held leadership positions for hundreds of disaster operations, including Hurricanes Katrina, Matthew, Irma, Maria and Michael, tropical storm Harvey and countless catastrophic flooding and wildfire events. David’s expertise in disaster recovery and strategic risk management stems from extensive experience in local government as a Nebraska mayor, state Senator, and Lieutenant Governor.

During his testimony, Maurstad outlined four major areas that reflect the Administration’s priorities for multi-year NFIP reauthorization:

  • Ensure that more Americans are covered by flood insurance by making insurance more affordable to low-and moderate-income policyholders. “Under the current law, FEMA does not have the authority to establish and charge premiums based on a policyholder’s ability to pay,” said Maurstad. “Although the NFIP offers mandatory discounts and cross-subsidies based on factors unrelated to risk, those discounts and subsidies do not take into consideration the policyholder’s financial need and, in fact, can make risk communication difficult because people may equate lower cost with lower risk.”
  • Communicating risk in real-time and providing Americans with tools to manage flood risk. Maurstad stressed the role technology plays in the flood risk space, and basic education on flood risk for prospective homebuyers. “Where it can rain it can flood and raising awareness of true flood risk enables people to make informed decisions about their family and property,” stated Maurstad. “Home buyers and renters may lack awareness about flood risk when they complete real estate transactions. Reforms that would require states to establish minimum flood-risk reporting requirements for sellers and lessors before residential transactions close would address this challenge. As climate change continues to make disasters more frequent and intense, it is vital that we provide people with the tools they need to protect themselves financially as well as physically.”
  • Reducing risk by addressing extreme repetitive loss properties. Maurstad noted that since 1978, nearly 100,000 structures have had two or more paid losses, while nearly 1,000 have suffered 10 or more losses. “The NFIP must have better tools to address insured structures that have experienced multiple flood claims,” said Maurstad in his testimony. “These repetitive loss and severe repetitive loss properties are responsible for a disproportionate share of overall losses and have a high risk of future flooding. About 2.5% of insured properties are considered unmitigated repetitive loss properties. Continuing to cover these types of structures without question contributes to the NFIP’s financial challenges and can increase the risk that families living in those structures will face threats to their lives, health, and safety.”
  • Instituting a sound and transparent financial framework that allows the NFIP to balance affordability and fiscal soundness. Congress has authorized FEMA to borrow from the U.S. Treasury up to $30 billion to pay claims. The NFIP currently carries $20.5 billion in debt to the U.S. Treasury, and pays approximately $400 million in interest expenses annually. “This means we are using the current premiums to pay for past claims,” explained Maurstad. “As currently structured, the program is unable to pay this debt back in full. Canceling the NFIP’s debt provides the program with a solid foundation that can support financial reforms around borrowing authorities, future interest, enhanced liquidity, and an “upper limit” for the size of an NFIP event. These reforms address fundamental structural challenges and are essential to building a viable NFIP.

“The NFIP combats the overall threat of flooding through four related components: Flood insurance; floodplain management; floodplain mapping; and mitigation,” said Sen. Brown in calling for more to be done for those in high-risk areas. “The Bipartisan Infrastructure Bill offers a down payment on new opportunities for communities to help homeowners stay out of harm’s way. But we need to do more. Infrastructure investment was a good start. But because of climate deniers in the Senate and our collective failure to fight climate change, that investment in the infrastructure bill will not be enough.”

Click here for more information on or to view the Senate Banking Committee’s hearing “Reauthorization of the National Flood Insurance Program: Administration Perspectives.”

Originally Appeared Here

Filed Under: BUY HOME, dsnews, INSURANCE, NEWS & TRENDS

American Financial Network to pay $1M fee to resolve fraud allegations

June 29, 2022 by Staff Reporter

Brea, California-based direct lender American Financial Network will pay about $1.04 million to resolve allegations that it fraudulently originated government-backed mortgage loans insured by the Federal Housing Administration (FHA).

The settlement agreement announced by the United States Attorney for the Eastern District of Washington on Tuesday puts an end to a joint investigation conducted by the U.S. Attorney’s Office for the Eastern District of Washington, U.S. Department of Housing and Urban Development (HUD), and the U.S. Department of Veterans Affairs after a former loan processor with AFN filed a lawsuit against the California lender in March 2019. 

The whistleblower claimed AFN knowingly underwrote certain FHA mortgages and approved for some mortgage insurance that didn’t meet FHA requirements or qualify for insurance between December 2011 and March 2019. AFN knowingly failed to perform quality control reviews that it was required to conduct, the former AFN loan processor alleged. AFN did not respond to requests for comment. 

“Quality and affordable housing is a critical issue in Eastern Washington and across the nation,” U.S. Attorney Vanessa Waldref said in a statement. “By improperly originating ineligible mortgages, lenders take advantage of the limited resources of the FHA program and unfairly pass the risk of loss onto the public.”

AFN, a participant of FHA’s Direct Endorsement Program since at least 2011, is responsible for carefully underwriting the mortgage to make sure it meets all FHA requirements, according to the U.S. Attorney’s office. Once a mortgage loan is insured by the FHA, the lender that holds the mortgage note can submit a claim for insurance benefits to FHA to cover its losses if the borrower defaults or is unable to repay the mortgage.

When a whistleblower, or “relator” files a lawsuit, the U.S. investigates the allegations under the False Claims Act and chooses whether to intervene and take over the action or to decline to intervene and allow the relator to proceed with the allegation on behalf of the U.S.

“Investigations such as these help safeguard the integrity of the home loan approval process and protect vulnerable veterans from fraudulent lending practices,” Jason Root, special agent in charge of the Department of Veterans Affairs office of inspector general’s northwest field office said in a statement.  

AFN did not admit to any wrongdoing. Per the settlement agreement, the former loan processor at AFN will receive more $228,172 of the settlement proceeds and will recover attorney fees, expenses, and costs. 

Originally Appeared Here

Filed Under: housingwire, INSURANCE, MORTGAGES, NEWS & TRENDS

Fannie Mae Executes CIRT Transaction on $19B of Single-Family Loans

June 15, 2022 by Editor

 

Fannie Mae announced that it has executed its sixth Credit Insurance Risk Transfer (CIRT) transaction of 2022. As part of Fannie Mae’s ongoing effort to reduce taxpayer risk by increasing the role of private capital in the mortgage market, CIRT 2022-6 transferred $725 million of mortgage credit risk to private insurers and reinsurers.

Since inception to date, Fannie Mae has acquired approximately $19.9 billion of insurance coverage on $675.9 billion of single-family loans through the CIRT program, measured at the time of issuance for both post-acquisition (bulk), and front-end transactions.

“We appreciate our continued partnership with the 24 insurers and reinsurers that have committed to write coverage for this deal,” said Rob Schaefer, Fannie Mae VP for Capital Markets.

The covered loan pool for CIRT 2022-6 consists of approximately 63,000 single-family mortgage loans with an outstanding unpaid principal balance of approximately $19.3 billion. The covered pool includes collateral with loan-to-value ratios of 60.01 percent to 80.00 percent acquired between August 2021 and September 2021. The loans included in this transaction are fixed-rate, generally 30-year term, fully amortizing mortgages and were underwritten using rigorous credit standards and enhanced risk controls.

With CIRT 2022-6, which became effective May 1, 2022, Fannie Mae will retain risk for the first 55 basis points of loss on the $19.3 billion covered loan pool. If the $106.3 million retention layer is exhausted, 24 insurers and reinsurers will cover the next 375 basis points of loss on the pool, up to a maximum coverage of $725 million.

Coverage for this deal is provided based upon actual losses for a term of 12.5 years. Depending on the paydown of the insured pool and the principal amount of insured loans that become seriously delinquent, the aggregate coverage amount may be reduced at the one-year anniversary and each month thereafter. The coverage on this deal may be canceled by Fannie Mae at any time on or after the five-year anniversary of the effective date by paying a cancellation fee.

As of March 31, 2022, approximately $906 billion in outstanding UPB of loans in our single-family conventional guaranty book of business were included in a reference pool for a credit risk transfer transaction.

Originally Appeared Here

Filed Under: dsnews, INSURANCE, MORTGAGES, NEWS & TRENDS

MBA wants tweaks to FHA’s second chance program

June 15, 2022 by Staff Reporter

 

The Mortgage Bankers Association (MBA) sent a letter to the Federal Housing Administration (FHA) last week asking the administration to shed light on some of the changes made to its Claims Without Conveyance of Title program.

Per the MBA’s communication, its members want the FHA to clarify the timeline for properties in a redemption period, reimburse costs associated with changes made to the program and explain whether properties in conveyance condition can be conveyed during the post-foreclosure sales period to the FHA.

In May, the administration, in a bid to increase housing supply, announced several additions to its CWCOT program, including an exclusive 30-day listing period for governmental entities, owner-occupant buyers, and nonprofits to bid on foreclosed, formerly FHA-insured properties. The announced changes must be implemented by Aug. 3, 2022.

The FHA gave the mortgage industry 30 days to provide feedback. A spokesperson from the FHA said responses received currently are under review and “it would not be possible to speculate on any potential changes at this time.”

The MBA said changes to CWCOT, which is dubbed the “second chance program,” will require third-party vendors to provide purchasers with access to a property for 15 days after it goes under contract. The MBA said there may be risks associated with the requirement, such as vandalism.

To mitigate risk, the MBA called on the Department of Housing and Urban Development to reimburse vendors for accompanying prospective purchases during the inspection.

The MBA also said the FHA needs to address the redemption period — which varies from state to state and gives a borrower one last opportunity to reclaim their property. The trade group wants the administration to clarify when the exclusive listing period begins in states with a redemption period.

The MBA wants the sales period for properties bound by a redemption clause to begin once the redemption expires.

Additionally, members of the trade group said FHA’s communication currently implies a property must sit at auction for a total of 90 days. The MBA wants clarity as to whether a property in conveyance condition can be conveyed to the FHA and accepted during the post-foreclosure sales period.

Changes to the second chance program first were announced by the Biden-Harris administration last year as a way to increase supply of single-family homes available to families.

Lopa Kolluri, principal deputy assistant secretary for housing, said in a May statement that establishing exclusive listings for targeted buyers “is critical” to help families achieve homeownership.

“This policy change is critical as the nation continues to address the challenges of a real estate market in which home prices are high and the availability of affordable housing supply is low, making it difficult for individuals and families to achieve the dream of homeownership,” Kolluri said.

A post-foreclosure sale is a last-ditch effort for a lender to sell an FHA-insured foreclosed property to an independent third-party prior to conveying the property to HUD. If sold to a third party, HUD pays insurance benefits for losses to the lender.

The program was designed to expedite the disposition of foreclosed-on properties and reduce the amount of time a property sits vacant. The FHA said the program is beneficial to lenders and the department because it reduces costs for both.

Originally Appeared Here

Filed Under: BUY HOME, housingwire, INSURANCE, MORTGAGES, NEWS & TRENDS

What’s next on the title tech front?

June 13, 2022 by Staff Reporter

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Thursday, June 9, 2022

Title tech companies are constantly trying to stay ahead of the curve, anticipating what needs to be tackled next to keep the title insurance industry current and competitive.

The Title Report recently sat down with Qualia founder and CEO Nate Baker to discuss his thoughts on the future of real estate.

Read on for more from Baker.

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Originally Appeared Here

Filed Under: INSURANCE, the title report feed

Homeownership and the Racial Wealth Gap

June 13, 2022 by Editor

The single-family home has been the main driver of wealth building among the middle class and that ideology has affected policy in one way or another in seeming every facet of the government. 

“Owning a home is undoubtedly an effective means of wealth building, including for households of color,” the Urban Institute said in a new article. “In 2019, Black homeowners had a median household wealth of $113,130—a majority of which came from their homes—more than 60 times that of Black renters. The disparity was similar, if slightly less stark, for Latinx households.” 

But according to the Urban Institute, policymakers’ focus on homeownership hasn’t led to meaningful progress in closing the racial wealth gap; the disparity in wealth between white and Black households is larger now than it was in 1968, when the Fair Housing Act was passed. 

“This gap is a result of historic and ongoing structural racism and systemic discrimination in not just housing but also employment, education, banking, and policing,” the Urban Institute said. “As a result, though efforts to ensure households of color have equal access to homeownership are important for narrowing the racial wealth gap, closing it will require bold, structural reform that goes beyond any one policy. 

Experts have continually questioned the merits of pushing homeownership as a policy goal as there is evidence that focusing on only expanding access to homeownership is not just insufficient to closing the racial wealth gap but also excludes the very people it is meant to help, is in equitable, and unsustainable in its current form. 

 

More than half of Black- and Latinx-led households are renters, who do not benefit from policies targeted to homeowners 

The share of Americans who own their home is the lowest in four decades. Despite that number increasing in recent years, this number is expected to drop even further due to recent trends. 

In 2019, the homeownership gap between Black and white families reached an all-time high of 32.5 percentage points. 

“According to the Urban Institute, homeownership rates for people of color also remain low, in part because of policies and practices that have prevented Black people and other people of color from purchasing homes. Renters currently represent nearly 40 percent of all households, and more than half of Black- and Latinx-led households are renters.” 

“Subsidizing homeownership as the primary route to building wealth thus excludes a significant portion of the population, who are disproportionately people of color. And though homeowners benefit from both tax breaks and rising property values, the latter have been linked to higher rents, which further disadvantage renters. Moreover, policies that privilege homeowners over renters may press families who are unwilling or unable to purchase homes into doing so, sometimes to their financial and psychological detriment.” 

The benefits of homeownership are smaller for people of color, while the costs and risks are larger 

Homeownership is not an equitable means of wealth building either: one of the key reasons that people of color do not see the same wealth from their home as their white counterparts is that Black and Latinx households tend to own lower-priced homes in disadvantaged neighborhoods. While a litany of other aspects such as disparities in income contribute to this discrepancy, a large share has also been attributed to racial bias: one study found that homes in majority-Black neighborhoods across the country are underpriced by up to 23 percent, resulting in a staggering $156 billion in lost home equity. 

“And despite purchasing lower-priced homes on average, Black homeowners have more mortgage debt (both in absolute terms and relative to the price of their homes), which contributes to greater financial risk,” the Urban Institute said. “Research has found that Black and Latinx homeowners of all income levels experience higher rates of distressed home sales, including foreclosures, which lead to lower annualized returns on average. Over 10 years, this disparity results in Black and Latinx homeowners receiving returns on their investments that are 44% and 22% lower than white homeowners’, which limits longer-term wealth accumulation.” 

“Compounding the issue is that homeownership costs (which, in addition to mortgage payments, include property taxes, maintenance costs, and insurance) are higher for homeowners of color than for white homeowners. Some of these higher costs have been attributed to racist practices, such as unfair methods of assessing property taxes. These further limit the benefits households of color receive from owning their homes, both relative to renting and when compared with white households.” 

Promoting homeownership contributes to negative climate effects, which disproportionately affect communities of color 

Due to the fact that most home across the country are detached single-family homes, policies that explicitly push this idea encourage urban sprawl at the expense of higher-density living. These harmful effects are disproportionately borne by communities of color, which compounds existing inequities. 

“In addition, a third of all homes in the US are considered to be at high risk of damage from natural disasters, and communities of color bear the brunt of this damage,” the Urban Institute said. “One study analyzing changes in household wealth in counties with high damage from natural disasters found that white households experienced an increase in wealth of $126,000 on average over a 14-year period, while Black and Latinx households experienced an average loss of $27,000 and $29,000.” 

“The emerging practice of “bluelining”—drawing arbitrary lending boundaries around neighborhoods perceived to have increased environmental risk (which often coincides with previously redlined neighborhoods)—threatens to further depress home values in neighborhoods of color and suggests that focusing only on subsidizing homeownership for wealth building is also unsustainable in the longer term.” 

 

So what can be done? The Biden Administration is addressing some aspects of the racial wealth gap and creating policy to expand access to homeownership such as by tackling the appraisal bias and promoting small-business ownership. 

But more can always be done, the Urban Institute said. Beyond ensuring that households of color have equal access to homeownership and its benefits, some additional strategies that policymakers at all levels could consider include the following: 

  • Implementing high and progressive taxes on inheritances and wealth 
  • Providing reparations to the descendants of enslaved Black Americans 
  • Implementing baby bonds, which would provide every child with a publicly funded trust account at birth 
  • Reducing personal and household debt, including by canceling student loan debt for qualifying households and reducing punitive fines and fees 
  • Increasing access to retirement savings plans and matched savings accounts 
  • Boosting household cash flows by reducing income inequities and providing protection against extraordinary shocks 

Originally Appeared Here

Filed Under: dsnews, INSURANCE, NEWS & TRENDS

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