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New Cal Law Addresses Anti-Black Bias in Home Appraisal Process

“Black homeowners in predominantly White neighborhoods are getting their homes appraised for far less than their neighbors,” Holden said. “It’s just another example of how bias, whether explicit or implicit, creates inequity for Black Americans. This is redlining 2.0.”

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Before she puts the home on the market, the mid adult realtor evaluates the property.

Paul Austin and his wife Tenisha Tate, a Bay Area Black couple, were confident that the sale of their Marin City home would net them a sizeable profit. They had invested hundreds of thousands of dollars into renovations before putting it on the market.

But that process turned sour when the couple discovered alarming race-based discrimination baked into the system of home appraisals.

Austin shared that harrowing experience with the California Task Force to Study and Develop Reparation Proposals during its fourth meeting on Oct. 13.

California’s Assembly Bill (AB) 3121, signed into law in 2020, created the nine-member task force to investigate the history and costs of slavery in California and around the United States. The group is charged with studying and developing reparation proposals for African Americans and recommending appropriate ways to educate Californians about the task force’s findings.

Austin’s testimony added to the growing body of evidence that the wealth gap that exists between Black and White families in the United States was created — and has been maintained throughout history – by deep-rooted racial biases and intentional government policy at the federal, state and local levels.

“We had an appraiser come out in 2019 to appraise our home,” Austin said, talking about selling of his home, which is located five miles north of San Francisco. “She was an older White woman, and she appraised our house for just under a $1 million after we had already put in an additional $400,00 into our property. We did our homework because we should have appraised for $1.4 million. We had to fight against it.”

Austin and his wife added an additional 1,300 square feet to the home’s original 1,300 square footage, he told the Task Force

A qualified appraiser is responsible for creating a report based on a visual inspection. The property’s lot size, square footage, amenities, and number of bedrooms and bathrooms are expected to provide the basis for an unbiased valuation.

When Austin and Tate found a second appraiser, they decided to ask a White female friend to pose as the seller. This time around, they actually netted a surprisingly higher offer of $500,000 more.

When Austin and Tate’s story went viral and made headlines in news reports around the world, other Black families emerged to share disturbing stories of how they, too, were given deceptively low estimations of their homes’ values.

“We’re right at the beginning. The story is now being told,” Austin told the task force. “But within our community, we have not had the opportunity to galvanize people to start looking at their loans and appraisals and comparing them with others, and I mean White folks, to see what’s going on in this industry.”

On Sept. 28, Gov. Newsom signed Assemblymember Chris Holden’s (D-Pasadena) legislation Assembly Bill (AB) 948, which would address discrimination in the real estate appraisal process, such as the prejudicial treatment of Austin and his wife received.

“Black homeowners in predominantly White neighborhoods are getting their homes appraised for far less than their neighbors,” Holden said. “It’s just another example of how bias, whether explicit or implicit, creates inequity for Black Americans. This is redlining 2.0.”

AB 948 would require the Bureau of California Real Estate Appraisals to gather demographic information on buyers and sellers of real estate property and compile data of homeowners from protected classes who file complaints based on low appraisals. The legislation also requires appraisers to take anti-bias training when renewing their licenses.

“This bill reflects a starting point in a much-needed conversation about how discrimination is still prevalent in the home buying and selling process, and I am committed to addressing this inequity,” Holden said.

Less than one in five Black California households could afford to purchase a home valued at the statewide median-price of $659,380 in 2020, as compared to two in five White California households that could buy a home at the same price, according to the California Association Realtors (CAR).

CAR also stated in a February report that the affordability gap is “stark in expensive counties like San Francisco,” where a median-priced home of $1,650,000 was only affordable for 8% of Black households, 15% of Latinx households, and 22%of Asian households, compared to 35% of White households.

The 2019 homeownership rate in California was 63.2% for Whites, 60.2% for Asians, 44.1% for Latinx and 36.8% for Blacks, according to the Census Bureau’s American Community Survey.

Austin said that his family was part of the “second wave Great Migration” of Black people from the Deep South that settled in California around the 1940s. Many of them worked in the Sausalito shipyard in Marin County.

Many of the Black families that came to California during that period lived in government housing in Marin City while working in the naval shipyards in and around San Francisco. When World War II ended, Austin’s grandparents had enough money to purchase a home anywhere in Marin County.

“Due to redlining, they did not have that opportunity. Blacks weren’t able to buy land outside of Marin City,” he said. “If you look at Marin County, currently it’s arguably the richest county in California. The data also shows, when race counts, that Marin County, as a whole, has the largest disparities anywhere. It’s such a huge gap.”

Austin, who attended the Historical Black College and University, Texas Southern University in Houston, said that he doesn’t want to see his children or other Black Californians deal with the same types of issues.

“Just think that if we didn’t have the will to fight the appraisal company,” Austin said. “It’s the systems that have been created by White people for White people that continuously, negatively affect people that look like me. Now it’s time to take those steps and right the wrongs.”

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Activism

State Task Force Getting Closer to Identifying What Reparations Look Like

The five-member expert panel, appointed by the task force, is quantifying past economic injustices African Americans faced in the state and elsewhere, and determining what or how much compensation should be made to Black people living in California.

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The five-member expert panel, appointed by the task force, is quantifying past economic injustices African Americans faced in the state and elsewhere, and determining what or how much compensation should be made to Black people living in California.
Economic experts for the California Reparations Task Force Dr. Kaycea Campbell, right, and Williams Spriggs, left, explain to the 9-member panel in Los Angeles that the group has “rough estimations” for five harms that could be used to determine compensation. CBM photo by Antonio Ray Harvey.

By Antonio‌ ‌Ray‌ ‌Harvey‌
California‌ ‌Black‌ ‌Media‌

The California Task Force to Study and Develop Reparations Proposals for African Americans will be conducting its last meeting of 2022 on Wednesday, Dec. 14, and Thursday, Dec. 15, at Oakland City Hall Chambers located at 1 Frank H. Ogawa Plaza adjacent to 14th Street.

The start time is 9 a.m. for both days beginning with one hour of public comment. The meetings will be live streamed via the official Task Force website or ETM Media on YouTube.

Task Force Chairperson Kamilah Moore says that the next meeting is of high importance “for a few reasons,” and will include an in-depth conversation about redress and repair.

“No. 1, we will begin to refine community eligibility standards (including residency requirements); No. 2, we’re inviting leaders from local/municipal reparations efforts from across the state to share their incredible work (i.e., Oakland, Los Angeles, Berkeley, Russell City, Palms Springs etc.),” Moore said in a written statement on Dec. 1. “No. 3, it will be the first-time task force members will collectively discuss and begin to determine what types of reparation proposals will be in the final report that will be released in June 2023.”

The task force’s two-year charge is scheduled to end in June 2023.

California’s AB 3121, signed by Gov. Gavin Newsom into law in 2020, created the nine-member task force to investigate the history and costs of slavery in California and around the United States.

The law charges the Reparations Task Force with studying the institution of slavery and its lingering negative effects on Black Californians who are descendants of persons enslaved in the United States.

From the information they collect, the task force will develop reparation proposals for African Americans and recommend appropriate ways to educate Californians about the task force’s findings.

After the task force decided who would be eligible for compensation in March, the panel approved a framework for calculating how much should be paid — and for which offenses — to individuals who are Black descendants of enslaved people in the United States.

An expert panel reported to the task force in March that a “conservative estimate” of 2 million African Americans in California have ancestors who were enslaved in the United States. According to the U.S. 2020 Census, there are about 2.6 million Black Californians out of a total state population of nearly 40 million residents.

The five-member expert panel, appointed by the task force, is quantifying past economic injustices African Americans faced in the state and elsewhere, and determining what or how much compensation should be made to Black people living in California.

The expert panel includes William Spriggs, chief economist for the AFL-CIO and former chair of the Department of Economics at Howard University; Thomas Craemer, Public Policy professor at the University of Connecticut; Dr. Kaycea Campbell, CEO for Ventana Capital Advisors and Los Angeles Pierce College associate professor of Economics; Dr. William A. “Sandy” Darity Jr., director of the Samuel DuBois Cook Center on Social Equity at Duke University; and Kirsten Mullen, a writer, and lecturer whose work focuses on race, art, history, and politics.

All five experts participated on the first day of the two-day meeting held at the California Science Center in Los Angeles two months ago. Spriggs and Campbell attended the event in person, while the other three experts appeared virtually.

Campbell and her colleagues discussed with the task force the “models” to provide a “road map” that would determine how reparations would be “paid and measured.”

Milagro Jones, a participant at the Reparation Task Force meeting in Los Angeles, holds up a 500-page interim report that was submitted to the California Legislature in June 2022. CBM photo by Antonio Ray Harvey, Sept. 23, 2022.

Milagro Jones, a participant at the Reparation Task Force meeting in Los Angeles, holds up a 500-page interim report that was submitted to the California Legislature in June 2022. CBM photo by Antonio Ray Harvey, Sept. 23, 2022.

The experts presented “five harms or atrocities,” down from the 13 they originally proposed, that could be used to determine compensations.

Campbell said the five categories under review will not be “exhausted” until they have received enough data to complete the process.

“This is not to say that other harms and atrocities are not important. As soon as, or if we get better data or more recent data, then we can, in fact, go through the process of what these look like,” Campbell said.

The experts made “rough estimates,” of property unjustly taken by eminent domain, devaluation of Black businesses, housing discrimination, the disproportion of mass incarceration and over-policing, and health inequities as the major harms.

Task Force Member Sen. Steven Bradford (D-Inglewood) released the following statement as clarification that the task force has not proposed that California compensate descendants of slaves with direct compensation for historical housing discrimination.

Bradford said, “Since its formation, a lot of misinformation and willful misrepresentation of the work from the Task Force has been released. The fact is that the Task Force has not completed its work and has made no formal recommendations to the Legislature. It’s important that we be deliberative and get this right because the nation is watching and it’s more than likely ours will be the model for all to follow.”

Members of the community and media are encouraged to visit the Reparations Task Force website and subscribe to the task force’s mailing list for updates at: https://oag.ca.gov/subscribe or call (213) 519-0504.

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Activism

New Affordable Below Market Rate Homes for Sale in San Leandro

The six new large three level BMR townhomes, within a total of 39 townhome units, are located at the new Maple Lane Development (687 Manor Drive). The BMR homes include: two low-income 1,605 square foot two-bedroom homes; and four moderate-income 1,760 square foot four-bedroom homes. All the homes will have two car garages. The projected BMR sales price of the homes will be approximately $275,000 for the two-bedroom homes, and $575,000 for the four-bedroom homes.

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All households interested in purchasing a BMR must submit a Lottery application to BAAHA by no later than 5 p.m. Friday, Jan. 6, 2023.
All households interested in purchasing a BMR must submit a Lottery application to BAAHA by no later than 5 p.m. Friday, Jan. 6, 2023.

Application Period to Apply for Lottery Now Open Until Jan. 6

Under the City of San Leandro’s Inclusionary Housing (IH) Program, six new Below Market Rate (BMR) homes will become available for sale starting in January 2023. The City’s IH Program requires that at least 15% of homes sold in new developments are set aside at prices affordable for low to moderate income households.

The six new large three level BMR townhomes, within a total of 39 townhome units, are located at the new Maple Lane Development (687 Manor Drive). The BMR homes include: two low-income 1,605 square foot two-bedroom homes; and four moderate-income 1,760 square foot four-bedroom homes. All the homes will have two car garages. The projected BMR sales price of the homes will be approximately $275,000 for the two-bedroom homes, and $575,000 for the four-bedroom homes.

To qualify for the BMR homes, a household’s gross combined incomes must be below the maximum income requirements. For the 2-bedroom BMR units for low-income households, the maximum income limits by household (HH) size are: $87,000 for 2 person HH, $98,650 for 3 person HH, $109,600 for 4 person HH and $118,400 for 5 person HH. For the 4-bedroom BMR units for moderate income households, the maximum income limits by household size are: $171,350 for 4 person HH, $185,050 for 5 person HH, $198,750 for 6 person HH and $212,450 for 7 person HH. There is a preference applied in the lottery toward first-time homebuyer households who live and/or work in the city of San Leandro. Households should also have savings in an institutional account to apply 3% towards a down payment; have at least a 640 FICO score; and the capacity to be approved by a Program certified lender for a mortgage to purchase the home.

The lottery intake, screening, administration, and IH Program underwriting for the Maple Lane BMRs, is conducted by a City contracted nonprofit, the Bay Area Affordable Homeownership Alliance (BAAHA). The private developer for the Maple Lane Development, DR Horton, is separately marketing the remaining 33 market rate units. To get more information on this BMR homeownership opportunity visit BAAHA’s website at https://www.myhomegateway.org/sanleandro-maplebmr.html.

All households interested in purchasing a BMR must submit a Lottery application to BAAHA by no later than 5 p.m. Friday, Jan. 6, 2023. Applications can be obtained at BAAHA’s website https://www.myhomegateway.org/sanleandro-maplebmr.html. For more information contact BAAHA by email at info@myhomegateway.com.

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Advice

Buying a Home May Not Be as Out of Reach as You Think, Even in This Market

While existing home sales have fallen month-over-month since the beginning of the year, prices hit a record high above $400,000 in May, according to the National Association of Realtors, as low levels of housing inventory and supply chain constraints have created an affordability squeeze for homebuyers. Mortgage rates have nearly doubled in the last six months — from 3% in 2021 to close to 6% in 2022 — making it increasingly challenging for many Americans to purchase a home, especially for those with limited income.

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While existing home sales have fallen month-over-month since the beginning of the year, prices hit a record high above $400,000 in May, according to the National Association of Realtors
While existing home sales have fallen month-over-month since the beginning of the year, prices hit a record high above $400,000 in May, according to the National Association of Realtors.

Here’s How You Can Achieve Homeownership

Buying a home is one of the most important purchases you will make in your lifetime. Pressure is mounting for those looking to buy right now, with home prices fluctuating and mortgage rates at their highest levels in over a decade.

While existing home sales have fallen month-over-month since the beginning of the year, prices hit a record high above $400,000 in May, according to the National Association of Realtors, as low levels of housing inventory and supply chain constraints have created an affordability squeeze for homebuyers. Mortgage rates have nearly doubled in the last six months — from 3% in 2021 to close to 6% in 2022 — making it increasingly challenging for many Americans to purchase a home, especially for those with limited income.

So, how do you know when you’re ready to buy a home? More importantly, how much home can you afford? We sat down with Denise Richardson, community home lending advisor at Chase, to answer those questions and discuss what the current state of the market means for you and your family’s home buying dreams.

Q: What are the main factors mortgage lenders look at when evaluating an application?

Richardson:

When it comes to homeownership, your credit score and debt-to-income ratio are major factors in the application process.

Your credit score is set based upon how you’ve used — or not used — credit in the past. Using credit responsibly, such as paying bills on time and having a low utilization rate will result in a higher score. Higher credit scores can help you qualify for the lowest interest rates. A score at 700 or above is generally considered good.

Additionally, lenders look at your debt-to-income ratio. This is a simple equation of how much debt you have relative to how much money you make. Borrowers with a higher debt-to-income ratio are considered more risky while a lower debt-to-income ratio may allow you to qualify for the best rates on your home loan.

Q: What are some tips for improving your credit score?

Richardson: There are a number of things you can do to improve your credit score, starting with reviewing your credit reports to understand what might be working against you. You can also pay down your revolving credit and dispute any inaccuracies.

Additionally, there are services like Chase Credit Journey to help monitor and improve your credit score. Credit Journey monitors all your accounts and alerts you to changes in your credit report that may impact your score. You’ll get an alert any time Chase sees new activity, including charges, account openings and credit inquiries. Chase will also notify you if there are changes in your credit usage, credit limits or balances. You don’t have to be a Chase customer to take advantage of Credit Journey.

Q: What are some factors that can affect the cost of a mortgage?

Richardson: There are several factors to consider when reviewing mortgage options including loan term, interest rate and loan type. Potential homebuyers should contact a home lending professional to understand and review the options available to them.

For example, there are two basic types of mortgage interest rates: fixed and adjustable. While adjustable rates are initially low, they can change over the course of a loan, so your mortgage payments may fluctuate. Loan term indicates how long you have to pay off the loan. Many homebuyers tend to opt for a 15-year or 30-year mortgage, though other terms are available. A longer loan term generally means you’ll have lower monthly payments, but you’ll pay more in interest over the life of the loan. A shorter loan term may come with higher monthly payments, but you’ll likely pay much less in interest over time.

Q: What are the costs of homeownership beyond the monthly mortgage payment?

Richardson: People often think of the down payment and monthly mortgage — but buying and owning a home carries additional costs. Closing costs, for example, can amount to up to 3% or more of the final purchase price. Other factors that could add on to your monthly payments are property taxes, homeowner’s insurance and homeowner’s association (HOA) fees. To get an idea of what this may look like for you, use an affordability calculator.

While there is no way for a buyer to completely avoid paying these fees, there are ways to save on them. Some banks offer financial assistance for homebuyers. As an example, Chase’s Homebuyer Grant offers up to $5,000 that can be used toward a down payment or closing costs in eligible neighborhoods across the country. There may also be homeowners’ or down payment assistance offered in your city or state. Contact a home lending advisor to learn about resources you may be eligible for.

For a deeper dive into this topic, our Beginner to Buyer podcast — episode three, “How Much Can I Afford?” is a great resource for prospective homebuyers to get answers to all their homebuying questions.

Learn more about the homebuying process, here.

Sponsored content from JPMorgan Chase & Co.

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