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Citi expands program to increase homeownership in diverse communities

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Citi is expanding its programs to encourage homeownership in diverse communities as part of a series of new initiatives to expand access to its lending products.

a program called home runseeks to help remove the main barriers to home ownership, especially when it comes to cost and affordability. Combined with a Lender Paid Assistance Program that helps

Separately, Citi aims to provide more credit access to people with limited or no credit history, and to provide owners of small businesses in Los Angeles with access to capital. We are launching two new pilots. Veteran.

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The move is part of a tradition of focusing on financial inclusion and racial equity, according to Lisa Frisson, head of financial inclusion and racial equity for Citi’s U.S. Personal Banking division.

“Creating access to the financial mainstream is fundamental to all initiatives,” said Frison.

“But helping communities create assets is transformative, and homeownership is one of them,” she said.

Lenders aim to better serve diverse communities

Citi news goes like this Bank of America recently announced We plan to offer a new zero down payment, zero surrender fee mortgage product to make homes available to members of overwhelmingly underrepresented communities.

“Our community-friendly affordable loan solutions help more Black and Hispanic families realize their dreams of sustainable home ownership. It’s part of a broader commitment to the community,” said Bank of America, said in a statement.

Studies show black homeownership rates are declining. If black homeownership rates are the same as he was in 2000, Over 770,000 black homeownersaccording to the Urban Institute.

Even though U.S. home ownership hit a record high in 2020, Black homeownership rates were still low More than a decade ago, according to the National Association of Realtors. Black Americans continue to face significant obstacles to buying a home, including high levels of student loan debt, a study found.

Mortgage activity has cooled off significantly this year, which could present an opportunity for financial institutions to enter new markets.

“Mortgage lending at some of these financial institutions may present an opportunity to better serve these communities,” said Keith Gambinger, vice president of market research firm HSH. Stated.

Eligible for Citi Lending Programs

Citi’s Home Run Community Affordable Lending Program is eligible for low- to moderate-income borrowers based on Census data. This typically includes borrowers with less than median household income, Frisson said.

With program expansion, Citi is expanding both income and geographic eligibility.

The program currently targets borrowers under 80% of median household income, but that number will increase to under 120% of median household income based on Census data.

“This gives more people the opportunity to take advantage of this,” said Frison.

Citi also plans to expand the program’s geographic footprint. HomeRun is currently available in cities such as San Francisco, Los Angeles, New York, Miami, Washington DC, and Chicago.

A “For Sale” sign hangs in front of a house in Miami, Florida, on June 21, 2022. According to the National Association of Realtors, sales of existing homes fell 3.4%, giving him a seasonally adjusted annualized rate of 5.41 million units. Sales fell by 8.6% from May 2021. The median price of homes sold in May was $407,600, up 14.8% from May 2021, as sales of existing homes declined.

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Available in additional markets such as Atlanta, Austin, Denver, Dallas, Houston, Philadelphia, and Cambridge, Massachusetts, with a particular focus on the majority-minority census track within those markets.

No private mortgage insurance is required, and homebuyers can either reduce their monthly mortgage or use the money they save to buy a home, Mr. Frison said.

It can be used not only for first-time home buyers, but also for those who have purchased a home before and those who are considering refinancing. Applies to purchases of single-family and two-family homes as well as condominiums and co-ops.

Additionally, the Lender Paid Assistance Program provides eligible borrowers with credit to help with closing costs. This will increase from $5,000 to $7,500.

To expand credit access for homeowners, Citi will look at other ways to assess credit readiness, Mr. Frison said. If a credit score is not available, we will look at other factors such as rent and utility bills to determine whether the applicant will be able to pay off their debts and become a successful homeowner.

In addition, Citi employs a group of Community Loan Officers with community ties, including Affordable Housing Community Partners and Realtors, particularly Diverse Realtor Associations.

“We’re going to work hard to get deep into the community to make sure that message gets through,” Furison said.

More access to ‘invisible credit’

At the same time, Citi launched two new pilots aimed at making credit cards available to those deemed “credit blind” and a special program aimed at Los Angeles-based small businesses. We are also launching a purpose credit program.

Both initiatives are scheduled to launch in early 2023 and are part of Project REACh, which is led by the Monetary Authority promoting greater financial inclusion through access to credit and capital.

Citi’s Credit Invisibles program is designed to accept and approve credit cards for people with little or no credit history.

This program works to identify if other data is available to approve an applicant’s credit application that was not approved through the traditional underwriting process.

Black small business owners expect to borrow more than average, but are less confident in accessing capital

Brookings Institution research They found that 46% of blacks and 32% of Hispanics are unbanked or underbanked, compared to 14% of whites.

Due to the lack of access to traditional lending services, many of the unbanked or unbanked Big ticket items such as payday loansAccording to 2019 St. Louis Federal Reserve Bank data, the average payday loan interest rate is 391%, while the average credit card interest rate is 17.8%.

“Credit cards are one of the most basic necessities from a financial management perspective, and being able to offer that option is something we are interested in.

Citi will also provide access to technical assistance resources and capital to Los Angeles-based small business owners early next year, with a particular focus on women, minority and veteran owners. The goal is to expand that program to other markets in the future.

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