FINANCE Bloomberg Businessweek November 16, 202036
COURTESY SUBJECT○ Williamsthose who qualify—is widening wealth inequal-
ity, often along racial lines. That yawning gap is
among the biggest challenges President-elect Joe
Biden, who owes his victory to Black support, will
face now that the pandemic has exacerbated divi-
sions in the country.
Cheap credit may be one of the best ways to avert
a foreclosure crisis, but it exacerbates a long-term
problem. The homeownership rate among Black
Americans was 46% as of Sept. 30, compared with
67.4% for all U.S. households and 75.8% for White
people, according to U.S. Census Bureau data. The
effects can be generational: Homeownership is the
main way American families accumulate wealth.
But today’s hot market prevents a lot of Black fam-
ilies from getting on the American dream escala-
tor, says Williams, a broker in Morristown, N.J.
Signs of the widening gap can be seen across the
nation. Outside Atlanta, New York, and Washington,
delinquencies are soaring in predominantly minority
counties, while mortgage originations have jumped
in wealthier areas, according to data from Black
Knight Inc. Mortgage originations are forecast to
exceed a record $4 trillion in 2020, even as home
loan delinquencies hit their highest levels since
the global financial crisis.
In Arlington, Va., the average house costs about
$755,000, and originations in the second quarter
jumped to $2.2 billion, more than double the same
period in 2019. In nearby Prince George’s County,
Md., where home values are much lower and the
population is majority Black, originations for refi-
nancing and purchase mortgages totaled only
$59 million in the second quarter.
Lisa Burnam, who lives in the county, got a
mortgage forbearance in April after her husband,
Tesfa, lost his job. The program allows homeown-
ers with government-backed loans who lost income
because of the pandemic to defer payments for as
long as a year. He found work at Amazon.com Inc.
in July, and they resumed making payments but
have been blocked from refinancing ever since.
“The whole point about forbearance was that it
doesn’t count against you, but apparently it does,”
says Burnam, who works for a nonprofit.
Burnam would save $200 a month by cutting
the interest to today’s sub-3% rate, from the 4.3%
she’s paid since buying her four-bedroom home
in 2018. With a second child due in December, she
could use the savings. She and her husband pinch
pennies, paying in cash to avoid debt, using his
three months of unemployment benefits to pay off
a student loan and credit cards. “We don’t have
a financial cushion,” Burnam says. “When you
have that cushion of money, it opens the worldTHE BOTTOM LINE Low mortgage rates have pushed up housing
prices and allowed homeowners to refinance. But many people in
poorer neighborhoods have been left out of the boom.of possibilities up. If my children want to chase
meteors because that makes them happy, they
should have that opportunity.”
In Clayton County, Ga., a working-class warehouse
hub in the shadows of Atlanta’s international air-
port, Black and White residents are falling behind.
Unemployment is running at 11.2%, the second-
highest in the state. New mortgage originations in the
county reached $164 million in the second quarter,
according to Black Knight. Fifty miles north, orig-
inations in largely White, affluent Forsyth County
hit $1.5 billion in the second quarter, almost dou-
ble last year’s total. Forsyth County’s delinquency
rate was only 5.7% as of Sept. 30, while in Clayton,
which is more than 70% Black, the rate was almost
three times higher.
Robin Kemp lost her reporting job at the com-
munity’s small newspaper, the Clayton News, early
in the pandemic and has since been paying the
bills for herself and her partner with unemploy-
ment insurance. She hasn’t bothered trying to
refinance, even though doing so might save her
more than $200 a month, she estimates. “I under-
stand a bank is going to look at me and say I have
this uneven history of employment,” Kemp says.
“But I get it done. I get the bills paid.”
Donald Snyder, a traveling salesman, came
out ahead. He listed his home in Piscataway, N.J.,
on July 1 and took an offer three days later, after
27 showings, for $405,000. Snyder bought the
1,800-square-foot home in 2005 for $400,000., hang-
ing on through the housing crash, when its value
plunged as low as $300,000. “The pandemic hit,
and prices started going up,” he says. After selling,
he bought a $220,000 house in Sicklerville, across
the state line from Philadelphia. The new house is
the same size as his old place, but mortgage pay-
ments were cut in half, he says. “It’s a win-win-
win-win,” Snyder says.
Williams, the New Jersey real estate broker,
sees the same story from another side. Even when
his clients prequalify for a mortgage, they haven’t
been able to close deals. Listings draw dozens of
bids, with offers $50,000, $75,000, or $100,000
above the asking price, he says. “Whether it gets
that price, I don’t know, because I’m usually gone
and onto the next place, because my buyers are
out,” he says. “A lot of people just quit. After los-
ing and losing and losing—Saturday after Saturday
after Saturday, in the car looking at places—they
just quit.” —John Gittelsohn, Katia Dmitrieva, and
Michael Sasso