In May this year, the Consumer Financial Protection Bureau (CFPB) issued a request for information “related to fees charged by providers of mortgages and related settlement services” as part of its efforts to clamp down on junk fees.
In response, Woodstock Institute submitted a comment letter urging the CFPB to apply a racial equity lenses to further analyses or proposals in this area.
Key points include:
- The recently-released Color of Wealth in Chicago report shows vast disparities in median net worth by race. In the Chicago metro region, the median white family has a net worth of $210,000, the median US-born Mexican family $40,500, and the median Black family $0.
- Drawing on both Woodstock’s Reframing the Racial Wealth Gap report and Mortgage Access Initiative: Phase 1 Policy Recommendations (created in partnership with Neighborhood Housing Services of Chicago), we show how marked racial disparities in mortgage costs make buying a home more expensive for households of color.
- Further analysis of Home Mortgage Disclosure Act (HMDA) data from 2018 to 2023 shows greater increases in median total loan costs for Black and Latine borrowers as compared to all borrowers.
- Drawing on HMDA data, the Institute for Housing Studies at Depaul University found that median total loan costs have increased in Chicago over the last 5 years. The increase among FHA loans was even steeper, which presents concern given the concentration of FHA loans among Black and Latine borrowers (for more on this, see the intro for our Community Lending Fact Book: 2022 Data Edition).
“For homeownership to meaningfully contribute to closing the racial wealth gap and counteract the legacy of redlining, we must ensure that mortgages are not disproportionately more expensive for borrowers of color. The data show that closing costs are one area where borrowers of color are bearing a greater cost burden than White borrowers and the population at large. We appreciate the Bureau investigating this area further and soliciting input from the public. As you work to protect consumers and eliminate undue cost burdens on homebuyers, we urge you to apply a racial equity lens to your analysis, to promote a truly just and inclusive economy.”
Read the full letter:
