Preserving the American Dream of Homeownership
January 29, 2021
By TJ Tann, Policy & Research Intern.
Homeownership is a cornerstone of building and maintaining wealth in America, a hallmark of the American Dream. However, few realize that for many white Americans following World War II the American Dream was manufactured by granting families loans backed by the federal government. As a result, these families were given the opportunity to purchase homes, build wealth, and eventually pass this wealth to future generations. Black families, however, were shut out of these opportunities, making it difficult to reap the same benefits of homeownership. With advances in civil rights and laws such as the Fair Housing Act of 1968, there were great gains made in homeownership. In fact, in the two decades following the passage of the Fair Housing Act, homeownership rates increased for African Americans by 6%.
The 2008 housing crisis hit homeowners of color the hardest, and nearly erased the gains seen since the Fair Housing Act. The COVID-19 pandemic has not led to a similar crisis, but rates of unemployment and the end of forbearance programs could put many homeowners at risk for foreclosure in the coming months. According to a study from Harvard University, 36% of homeowners across the country have lost income. Just 7% of white homeowners have lost income and have had their homes jeopardized as a result, as opposed to 17% of Black homeowners, and 18% of Hispanic homeowners.
This week, President Biden signed an Executive Order to extend the eviction and foreclosure moratoria, which was set to expire January 31. The extension pushes it out for another month. Given the temporary protections this relief offers for homeowners, it is important to enhance statewide protections. This week, Virginia’s elected officials took first steps to strengthen protections for homeowners, particularly for those at risk of foreclosure.
HB2175 and its companion bill SB1327, passed out of their respective committees and would protect homeowners by extending the notice period from 14 days to 60 days as well as ensuring mortgage companies are giving families the legal and housing assistance needed by requiring they offer resources to housing counseling agencies upon giving notice. Most importantly, this law makes significant strides towards not only protecting those who have homes but it allows them to protect their investment and prevent their loss of equity from foreclosure. Virginia will hopefully take yet another step forward in shrinking the racial wealth gap through ensuring Black homeowners are shielded from the impact of the pandemic.
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