Las Vegas-based Legacy Home Loans, the largest Black-led mortgage banking firm in the U.S., has developed a special-purpose loan program for Black people who want to become homeowners, with a 1 percent downpayment, free appraisal, and help with closing costs for qualifying buyers.
The Closing The Gap home loan program will be piloted in six U.S. metro areas including Atlanta, Baltimore, Chicago, Detroit, Memphis, and Philadelphia. The borrowers must presently live in a census tract of the six cities that has a 51 percent or higher Black population but there are no restrictions on where Black homebuyers can buy their new home, the company said in a Sept. 8 press release.
The loan program was developed by Black mortgage professionals for Black borrowers.
“I think we have a ‘niche market’ — no mortgage company knows our market and our people like we do,” said Legacy Home Loans President and CEO Ben Slayton, 77, in an interview with National Mortgage Professional (NMP) magazine.
To qualify, would-be home applicants must also have a minimum 620 FICO credit score with underwriting guidelines based on the borrower’s income.
A pioneer in the real estate and mortgage industry, Slayton was the first Black member of the National Association of Realtors and the first Black Century 21 Real Estate franchisee broker-owner.
He has worked in the business for more than 56 years and said building the largest Black-led mortgage lender in the U.S. is a calling.
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Slayton started Legacy Home Loans in July 2018 “because I did not see anyone addressing the 30-percent homeownership gap between Black Americans and white Americans,” he said. “Only four out of every 10 Black families own the homes they live in. In contrast, seven out of every 10 white families owns the homes they live in.”
Slayton attributes the current homeownership gap in part to the segregation and bigotry by bankers that took place with the G.I. Bill. After World War II, Black people were redlined into poorer neighborhoods, ensuring that loans would be denied. In addition, builders built into the new home documents a deed covenant restriction that prohibited Black people from buying homes.
“I want to make a difference for my people,” Slayton said.
His company’s mission is “to empower the African American community throughout the United States with a focus on building sustainable wealth through homeownership and leaving family legacies.”
Slayton’s goal is to lend $1 billion in mortgage loans to African Americans by 2023 and to continue to lend $1 billion a year and more to African Americans thereafter.
To that end, Slayton said he plans to open branch offices in every U.S. city with a 25 percent or more African American population, a median annual family income of $50,000, and an average home price of around $200,000. The company is licensed in 38 states with brick-and-mortar branch locations in California, Georgia, Illinois, Maryland, Missouri, Nevada, North Carolina, and South Carolina.
Slayton acknowledged he alone cannot close the Black-white homeownership gap. “It’s going to take a ‘village’ of banks and mortgage lenders throughout the U.S. to partner with the U.S. government to help to close the homeownership gap,” he told NMP magazine.
Slayton has some ideas on how to make housing more affordable. Here’s an excerpt from his NMR Magazine interview:
“What if Fannie and Freddie — the Government Sponsored Enterprises (GSEs) — and HUD required each seller/servicer and approved mortgagees to have a written affordable housing goal, whereby the seller/servicers and approved mortgagees were required to have an outreach program to low- and moderate-income families, minority communities, rural areas, and other underserved populations (just like the GSE’s and HUD). Let’s say that each seller/servicer and approved mortgagees were required to increase their lending volumes to low- and moderate-income families, minority communities, rural areas, and other underserved populations by 10% each year, compounded for 10 years. And the GSEs and HUD audited the seller/servicers and approved mortgagees annually as a requirement to be recertified and reapproved to do business with the GSEs and HUD? The GSEs and HUD have affordable housing goals, but they do not place the same responsibility on to the seller/servicers and approved mortgagees. If the GSEs and HUD would implement such a program for its seller/servicers and approved mortgagees, the housing gap would be closed for all minorities in 10 years, and we would have a completely different mortgage world and society.”Ben Slayton, president and CEO of Legacy Home Loans
Civil rights attorney Ben Crump tweeted in response to news of the new Legacy Home Loans initiative. “The haunting effects of past redlining and discrimination in the home buying process will not stop Black people from owning a home with this important initiative.”