The Commercial Appeal
MEMPHIS, Tenn. (AP) – Tamika Walker was paying $800 a month to rent a Northaven house, and grew tired of it.
“Paying rent and just seeing [the money] disappear,” the 37-year-old IRS employee recalled. “I wasn’t going to have anything to call my own; I’m paying this `mortgage’ in rent. I decided I wanted to buy a house.”
After 10 years of discipline to clear up $25,000 in credit card and car-loan debts as well as a credit history that included bankruptcy, Tamika and her husband Clarence Walker bought a house.
They paid $129,900 in July 2014 for a new home in the Wolf River Bluffs subdivision near McLean and James Road.
For the same amount they had been paying in rent, Tamika said, “I can pay my mortgage and my utilities.”
Now, those monthly checks steadily build the Walkers’ ownership interest in the house as well as their long-term wealth.
“Rebuilding Black Wealth Through Homeownership” happened to be the name of a regional conference two weeks ago. Not by chance did a national association of Black real estate brokers choose Memphis for its Southeast conference.
The Great Recession’s foreclosures ravaged Memphis’s moderate- and low-income neighborhoods. Street after street of houses that had been owned by the families they sheltered turned into rental rows.
In Memphis, where the population is 63 percent Black, the financial crisis caused a diaspora of sorts, routing thousands of families from the mortgages that would have built family wealth.
“We lost thousands of homes in the recession. I mean tens of thousands, not thousands,” said Tim Bolding, executive director of the nonprofit United Housing. The agency, which works to increase homeownership, developed Wolf River Bluffs.
In 2007, about 20 percent of single-family homes in Memphis were rentals, Bolding said.
“Today, as much as 40 percent of houses in Memphis are rental” compared to 11 percent nationwide, he said.
Enter the National Association of Real Estate Brokers, a historically Black organization that was founded 69 years ago to promote equal access to housing. The organization has launched a five-year campaign to increase by 2 million the number of African Americans who own homes nationwide.
Part of the effort is an educational campaign to prepare renters for buying houses, and to reduce fear and uncertainty about the process. But the brokers association also is addressing barriers it sees at the other end, with lending.
Using the analytical LendingPatterns software of Compliance Technologies to probe the home mortgage data lenders are required to report, the brokers association has found that in Memphis:
• White applicants for home loans succeed in getting a mortgage at a rate 1.72 times more than Black applicants. Compliance Technologies labels it the “origination disparity index;”
• And Black applicants are denied a loan at a rate 2.56 times greater than Whites. The company calls it the “denial disparity index.”
In 2014, lenders received 8,646 home-loan applications from Whites in Memphis. Of those, 5,215 or 65.5 percent were successfully completed. But of the 7,000 loan applications received by Black Memphians, 2,526 or 38 percent were approved by lenders.
“The main thing is that Black homeownership does matter,” said association president Ron Cooper, a Los Angeles real estate broker.
Black Americans have the lowest homeownership rate of any ethnic group at 41.9 percent, according to a Census report issued in January. That’s down from 49.1 percent in 2004, before the financial crisis. Homeownership rates for non-Hispanic Whites is 74 percent.
“We lost quite a bit of equity wealth. We need to rebuild it,” Cooper said of African Americans. “The message is that the pursuit of homeownership of Black Americans is still a noble pursuit. The American dream is within our reach; we just got to reach for it.”
The foreclosure rate for Black Memphians was seven times greater than Whites, said Mark Alston, public affairs chairman for the brokers association.
“Equity was stripped. And now you have an extreme level. You also have declining income and population since 2005 as well as a very high unemployment rate in the Black community,” Alston said.
The national organization chose Memphis as one of four regional sites for the winter conferences in part because the 106-member Memphis chapter is among the largest and fastest growing in the U.S., Cooper said.
Memphis is also ripe with opportunity because the city’s home prices remain affordable, he added.
The brokers last month held their first midwinter conference in Oakland, California, where skyrocketing home values are preventing renters with modest incomes from buying.
“There’s a high rate of gentrification going on in the city of Oakland,” Cooper said. “A 1,200-square-foot house is going for a half a million dollars. It’s really kind of pricing us out.”
The biggest barriers to homeownership in Memphis are the debt and credit problems of so many families.
“We go through a lot of clients before we can get one that’s qualified to move on into home ownership,” said First Tennessee Bank’s Community Reinvestment Act officer, Keith Turbett. “Unfortunately, we may go through 25 to get two that are ready to go.”
First Tennessee partners with the nonprofit Operation Hope to provide free financial literacy workshops in Memphis. The bank also offers its Hope Inside program, basing two financial counselors at branches to offer free, one-on-one financial counseling whether the recipients are customers or not.
“African Americans are denied [loans] almost twice as much as Whites,” Turbett said. “We’ve seen average [credit] scores of almost 53 points less for African Americans than for Whites. So we recognize we have a credit problem.”
Generally, credit scores range from 300 to 850. “We feel the 700s is an average, good credit score to shoot for that usually gets you in any loan,” Turbett said.
A recent First Tennessee quarterly report states that Hope Inside counselors saw more than 1,000 people, and 86 percent were African Americans. “The average credit score was 581 when they first came in,” Turbett said. “We’re trying to move them up to the 700s. One program is called 700 Credit Score Community.”
Meanwhile, investors, including a lot of out of town landlords, continue “pick and choose” houses that were once owned and occupied by Black families, said Thomas Byrd, a broker with ERA Legacy Realty and president of the Memphis Chapter of the National Association of Real Estate Brokers.
“I think that’s been a major cause for declines in schools and communities: No homeownership pride in a lot of our inner-city,” Byrd said.
“A lot of our communities are just rental. That’s the big thing now. If we teach them to become homeowners and save and give them a plan and give them a road map to be a homeowner, it’s the key to wealth-building,” Byrd said.
For the average person, buying a home is the “first step to increasing wealth,” said Regina Hubbard. She’s a broker with Fast Track Realty and was the 2013 president of the Memphis Area Association of Realtors.
“If you were not born into it, then homeownership is the first step to get there,” she said. “Renting will help the landlord get there, but it won’t help you.”
That’s how former renter Tamika Walker eventually saw things.
“I was trying to become a more responsible adult,” the 37-year-old said. She felt she was missing out on something as a renter.
“When they say [homeownership] was the American dream, it was just a dream,” Walker said.
But Walker sacrificed for years to make ownership become reality.
“It was something I wanted, that some people in my family didn’t get to experience,” she said.
“It was important to me.”