Racial Equity Gap: A Call to Action

Due in part to the current affordability of homes and home loans, racial inequity, along with an ever-growing wage gap, has risen to a crisis level throughout the country according to the Federal Home Loan Bank of San Francisco (FHLBank San Francisco) who has released a package of recommendations for updating the housing ecosystem to close the racial homeownership and wealth gaps. 

The 42-page package represents a first for the bank; this information is the result of a series of meetings called the Homeowner Solutions Summit convened by the bank and directly calls out entrenched systemic failings and offers novel—yet still constructive—ideas that have the potential to break down structural barriers that historically have disadvantaged people of color. 

“The inequities entrenched in the homebuying process cannot be eradicated by a single entity or a single solution. To make meaningful change in the industry, we must bring all stakeholders together to consider the options and formulate approaches that make the most of the expertise at hand,” FHLBank San Francisco CEO Teresa Bazemore said. “Our Homeownership Solutions Summits provided an opportunity for discussion and collaboration, and we now have pages of practical and sustainable action items that, together, can help people of color gain equal access to homeownership and wealth-building.” 

Among the recommendations: 

• Expand mandatory financial education and begin teaching the basics in grade school. 
• Broaden the reach of downpayment assistance programs to include buyers who earn more than 80 percent of area median income. 
• Encourage the widespread adoption of novel or modern building practices that can bring down costs without sacrificing safety or comfort. 
• Provide support to elected officials in favor of higher-density zoning and less-restrictive land-use ordinances. 
• Modernize credit scoring to bring more creditworthy borrowers into the housing finance system. 

True to its title, FHLBank San Francisco’s industry report is a call to action, one built on the collective efforts of more than 150 participants - mortgage finance industry innovators, business executives, government officials, builders, affordable housing and sustainable homeownership advocates, FHLBank member institutions, and other stakeholders - who gathered in four closed-door Homeownership Solutions Summits held in Arizona, California, and Nevada in 2022 and 2023. In convening these Summits, the Bank’s goal was to bring disparate, siloed players together to share, explore, and develop evidence-based ways to boost access to mortgage financing and sustainable homeownership. 

The Homeownership Solutions Summit series and resulting recommendations are part of a continuum of FHLBank San Francisco initiatives focusing on advancing racial equity that includes FHLBank San Francisco’s two-year, $1.5 million partnership between the FHLBank of San Francisco and the Urban Institute. The Racial Equity Accelerator for Homeownership collaboration has produced groundbreaking research on the effectiveness of alternative underwriting methods, impact of student debt on Black homeownership, the use of mortgage reserve products to help sustain homeownership, and, coming soon, how best to harness the power of artificial intelligence for equity in mortgage financing. 

Click here to view the package published by the FHLBank of San Francisco.