Homeownership is one of the main ways to build generational wealth. In Louisville, 37% of Black residents own their homes.
Louisville’s rates of Black homeownership and home values have declined between 2000 and 2017 ━ according to a 2019 report from the Metro Housing Coalition. It’s a result of racist barriers and obstacles that Black residents still face when trying to build and maintain wealth.
Mayor Greg Fischer said $3 million of the city’s latest budget will be used to cover up to 20% of home purchase and closing costs.
“The main barrier to homeownership is the downpayment. There are a lot of people who have been paying rent, on time, for decades and decades but, for whatever reason, they can’t come up with the down payment,” Fischer said.
He said the program will help about 150 households ━ and estimated each eligible family could receive an average of $22,000. It’s not limited to first-time home buyers, but eligibility requirements include:
- Mortgage pre-approval from a local bank or financial institution.
- Having at least $1,500 in savings.
- Being up-to-date on any debt collection, with the exception of up to $10,000 in medical collections.
While it’s been more than 50 years since the federal Fair Housing Act banned racial discrimination in lending, the denial rate for Black residents significantly surpasses that of white mortgage-loan applicants.
The Metro Housing Coalition’s 2019 report cites “Home Mortgage Disclosure Act data for Louisville and Jefferson County shows banks disproportionately deny home loans” to applicants of color. MHC’s analysis of state HMDA data from 2015-17 shows the denial rate for Black lower-income households was more than 7.5% higher than white, low-income applicants. And, wealthier Black households were 10% more likely to be denied for home loans than their white counterparts.
Another possibly exclusionary clause for Black residents is needing to be up-to-date on all outstanding loans. But studies show Black people carry a disproportionate amount of the national student loan debt, contributing to a larger, and generational, cycle of debt and repayment. This is such a prevalent issue that federal agencies have taken steps allowing loan-burdened borrowers to more easily qualify for federally insured mortgages.
One of the program’s terms is that residents would have to live at the property they receive assistance buying for 5 to 15 years, depending how much money they get.
WFPL reached out to the city’s office of housing for comment but did not hear back before this story’s deadline.
In an effort to help existing homeowners stay on track, financially, the city set aside $5.8 million dollars in the budget to assist with home repairs.
According to data from the Federal Reserve, 12% of adults wouldn’t be able to pay their monthly bills if they were hit with an unforeseen $400 expense. Resident Toni Tutt said, last year, the repair programs helped her stay afloat.
“When you have little money and something breaks down ━ things happen where you can’t replace it,” Tutt said. “If it weren’t for them, if something happened, I don’t know what I’d do.”
Financial assistance covers interior and exterior repairs and replacements, including HVAC systems, plumbing, roofs and gutters . Funds would also cover upgrades the city deems necessary, like insulation, which could significantly help lower residents’ utility costs. However, cosmetic home improvement measures like backyard fencing and basement finishing will not be funded.
The budget earmarks $3 million of the $5.8 specifically for homeowners in the Algonquin, California, Chickasaw, Hallmark, Park DuValle, Parkland, Park Hill, Portland, Shawnee, Shelby Park and Smoketown neighborhoods. The rest of the money isn’t geographically restricted.
Marilyn Harris is executive director of Metro Louisville’s office of housing. She said the city has received more than 800 calls and applications for home repair help.
“The need has been overwhelming for quite some time,” Harris said. “As we know, the home, the place that we lay our head, is the most important foundation in having a good safe environment and being able to increase your income and education.”
To qualify for both the downpayment assistance and repair programs, households must make 80% or less of the area’s median income (AMI). For a family of four, that’s about $61,500 a year.
The city also assigned $10 million dollars in the annual budget to the Affordable Housing Trust Fund (AHTF). A quarter of the funds will go toward building housing for families who make 30% or less of the AMI ━ this is the first time, since its inception 13 years ago, that the AHTF has dedicated money to benefit residents who fall into the extremely-low-income level.