Closing the Racial Equity Gap

Homeownership remains the key driver of generational wealth and the cornerstone of the American dream. This is why closing the gap between white and Black homeownership is the key economic and civil rights issue in America today.

There is a misconception among many Americans that while progress still needs to be made on issues of racial equity and wealth disparity, things are slowly getting better. This is simply not true when it comes to homeownership. The 30% gap between the percentage of white and Black Americans who own homes is larger than it was in 1960 when housing discrimination was legal.

As America’s largest Community Development Financial Institution (CDFI), it is our mission to empower all Americans to pursue their dreams by providing fair and equal access to the financial services they deserve. We provide access to affordable capital to the underbanked to ensure that they have the same opportunity to purchase a home, open a small business, attend school, or simply to have fair and equitable access to basic financial services.

Our impact is measurable. In 2020, we originated approximately 20,000 loans totaling more than $7 billion, with more than 70% funded to Black, Latino, and underbanked borrowers. We are working to close the racial equity gap one household at a time.

The Change Company was certified by the United States Department of Treasury in 2018 to bank Black, Latino, and low-income borrowers and communities that the Treasury Department has determined to be systemically underserved by banks and traditional financial institutions. To pursue its mission of banking the unbanked, Change isa licensed residential mortgage lender and an approved seller-services with Fannie Mae, Freddie Mac, and Ginnie Mae (including FHA, VA, and USDA loans).

We serve prime borrowers who are denied credit by traditional banks and mortgage providers for non-economic reasons. We recognize that all borrowers are different. Therefore, we offer a diverse set of prime loan programs that give borrowers from all backgrounds a real opportunity to become a homeowner and set out on a path to financial security and wealth generation.

For the most part, traditional financial institutions continue to utilize outdated risk-assessment policies that leave millions of borrowers out of the system, despite creditworthiness on par with banked customers. According to the National Association of Realtors, Black mortgage applicants are denied 2.5 times more often than white applicants. In 2020, $361 billion in potential mortgages with loan-to-value ratios below 80% were denied, and $125 billion includes loans that would have had an LTV below 60%. These are predominantly loans that should be approved if considered on economic factors alone.

In addition, Change is building the financial services infrastructure to ensure that our borrowers are treated fairly and responsibly in all aspects of homeownership. Through our appraisal management, escrow, and insurance brokerage companies, The Change Company provides fair and responsible access to these financial services essential to building generational wealth in underserved communities.

We are committed to diversity not just in our mission but in our leadership and executive team. Each of Change’s businesses boasts an executive team and board of directors comprised of over 60% minority members, including the Chairman and either CEO, President or Executive Director of each business. Change’s appraisal management company is run by a Black female executive – making it the only Black/ female-run appraisal management company in the country. Change AMC is focused on fair, equitable appraisals for minority and urban homeowners. Similarly, Change’s escrow and insurance companies have female CEOs who are Asian and Black, respectively.

Change has formed meaningful partnerships with socially responsible banks, insurance companies, corporations, and asset managers intent on eliminating structural economic inequalities. This includes an innovative partnership with Netflix that was formed to expand Black homeownership across America by at least $1 billion.

Change has also partnered with banks to expand homeownership in low- to moderate-income communities by $1 billion and committed to an additional $1 billion of lending to Latino borrowers.

Change is not only improving the lives of individual borrowers but literally transforming communities. We launched a branch in El Paso, Texas in 2019 given the severe un-banking of the community comprised primarily of Latino, low-income, and those in the U.S. military. Since its launch, the company has grown its staff in El Paso to over 125 employees, now has two branches, and according to official data, Change is now one of the top three mortgage loan providers in the community.

There is much more work to be done. The Change Company is leading the way by increasing homeownership and lending to small businesses in the communities where underbanked Americans work and live. But we can’t do it alone – we invite other financial service partners and socially responsible companies to join us in our effort to better serve the underbanked and address the key economic and civil rights issues in America today.

Martice Millis is Chief Strategy Officer at The Change Company LLC. and Reverend Everett Bell Jr. is the Chair of The Change Company Community Board and Senior Pastor at Bethel African Methodist Episcopal Church in Monrovia, CA.