By Kim Norvell, Des Moines Register
Iowa’s GreenState Credit Union has announced a goal of loaning $1 billion to people of color in Iowa and neighboring states to help close a wide homeownership gap.
The North Liberty-based company, formerly the University of Iowa Community Credit Union, is doubling its commitment of $500 million by 2030. It announced that goal last year, specifically targeting it to Black homebuyers, and loaned $76 million to 523 borrowers in just the first year.
“That told me two things. One, maybe there’s an opportunity for us to do more than what we’ve been doing in the past. And two, in doing so maybe we can expand the target,” said GreenState President and CEO Jeff Disterhoft. “I think we all recognize there’s disparity in homeownership in other ethnicities as well, though they are more pronounced in the Black and African American communities.”
Though it’s existed for generations, the homeownership gap for Black Americans is growing, expanding to about 30 percentage points in 2021 from 27 in 1960. It received renewed focus after the killing of George Floyd by a white Minneapolis police officer in May 2020 that set off months-long protests and national conversations about inequity.
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Iowa’s disparity in homeownership
In Iowa, the disparity is even more pronounced. As compared to 44% nationally, the homeownership rate for Black Iowans is 23%, more than 50 percentage points below the 74% for white Iowans, according to the U.S. Census Bureau’s 2019 American Community Survey. For Hispanic Iowans, it’s 53%; and for Iowans of Asian heritage, it’s 51%.
Additionally, an analysis by The Markup, a nonprofit newsroom, found Black applicants in the Des Moines/West Des Moines metro are 2.6 times more likely to be denied a conventional home loan than similarly qualified white applicants.
Homeownership ‘a key piece of the American Dream’
Homeownership is the chief means Americans have of building generational wealth. A 2020 Brookings Institute study found that after a lifetime of employment, the median net worth of white Americans ages 65-74 was $302,500, while for Black Americans it was $46,890. Brookings said the proportionate disparity persisted even among the top 10% of earners.
It attributed the gap to Black families’ relative dearth of inherited wealth, including homes and property.
GreenState board chair Fred Mims said Floyd’s death was a motivating factor for the financial institution to explore ways to close the homeownership gap, help people of color build wealth and give them “a key piece of the American Dream.”
“You feel a sense of worth if you own a home,” Mims said. “You’ve got your roots tied down and you feel a sense of accomplishment, as well.”
What does the home loan program do?
To stick to its commitment, GreenState, with 24 locations across Iowa, including eight in the Des Moines metro, has introduced a new affordable housing loan program that reduces the credit score and loan-to-value ratio needed to qualify for a home loan.
“The credit score requirements aren’t as high. The down payment requirements aren’t as much,” said Ryan Doehrmann, chief mortgage officer. “Some of the guidelines are little more flexible to make it more helpful for people to get approved.”
For example, a borrower with a 630 credit score and limited to no down payment wouldn’t qualify for a traditional loan but would be given “a harder look” under the new program, Doehrmann said.
And for those who still don’t qualify, the financial institution has committed to helping get them there. GreenState has partnered with housing counselors across the state to enroll prospective homebuyers who don’t yet meet loan criteria in financial literacy programs to help them qualify.
“Instead of saying ‘no’ we’re saying ‘not yet,'” Doehrmann said.
The new program is targeted toward residents in low-to-moderate income census tracts, where there exists an “unfortunate correlation between people of color and people of low-and-moderate income,” Disterhoft said.
White applicants who qualify will not be turned away.
It’s open to anyone in Iowa, plus bordering counties in Illinois, Wisconsin, Nebraska and South Dakota. The institution also recently expanded into Chicago with its acquisition of Midwest Community Bank.
Other banks commit to helping nonwhite homebuyers
Wells Fargo — which bases its home mortgage division in the Des Moines metro — J.P. Morgan Chase and Bank of America over the last few years have also announced commitments to boosting mortgage availability for nonwhite homebuyers.
GreenState is working with the National Association of Minority Mortgage Bankers of American to get Accredited Social Impact Lender recognition for its program.
Disterhoft is hopeful GreenState’s efforts can be duplicated by other financial institutions in Iowa and nationwide.
“We are actually trying to be proactive in our assistance to the people who, quite frankly, need in the most,” he said. “And encourage in time others to follow us in doing so.”
Kim Norvell covers growth and development for the Register. Reach her at [email protected] or 515-284-8259. Follow her on Twitter @KimNorvellDMR.
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