New Program Promotes Black Homeownership Seeks 1 Million New Black Homeowners By 2005

WASHINGTON, 3:49 p.m. EDT April 4, 2001 -- A program to make 1 million black families homeowners by 2005 was announced Tuesday by a black lawmakers' group, mortgage-market giants Fannie Mae and Freddie Mac, major banks, mortgage companies and community groups.

New mortgages, many with special terms for low-income borrowers and those with bad credit records, could total $50 billion under the program. "For far too long, minority communities have been left out of the homeownership process," Rep. Eddie Bernice Johnson, D-Texas, chairwoman of the Congressional Black Caucus, said at a news conference. "America is only as strong as its communities, and communities are only as strong as the families that live within. Homeownership is part of the foundation of a stable family."

Mel Martinez, secretary of the Department of Housing and Urban Development, said the new program "means 1 million more African-American families who can live their American dream."

The program, called "With Ownership, Wealth," or WOW, will begin next month in 20 states, the District of Columbia and the U.S. Virgin Islands. To reach prospective home buyers, there will be homeownership fairs and seminars, radio and newspaper ad campaigns and individual credit counseling. Homeownership among minorities grew four times faster than for whites in the 1990s, yet only 46.7 percent of black families own their homes, compared with 73 percent of white families and 67 percent for the country overall, according to HUD.

The banks and other lenders will offer a variety of mortgages with special terms. Fannie Mae and Freddie Mac have agreed to buy them, and several mortgage insurance companies will insure them. The special terms will include down payments of as little as $1,000, or 2 percent of a home's value; mortgages at interest rates below the usual rates for borrowers with weak credit histories; and a one-time reduction in interest rates for borrowers who make their mortgage payments on time for 24 straight months. Money for down payments may come from grants or from unsecured loans from community groups, government agencies or employer-assisted housing programs.

Fannie Mae and Freddie Mac are government-sponsored but publicly traded companies that buy mortgages from original lenders such as banks and package them into securities for resale to investors. They are not committing new money to the WOW plan, but will purchase mortgages for black families as part of their existing programs for low- and moderate-income borrowers. Freddie Mac is contributing $300,000 for the outreach programs and other expenses of the WOW program, according to spokesman Douglas Robinson. A Fannie Mae spokeswoman declined to give a figure for that company's contribution.

The 20 states in which the outreach programs will be available are Alabama, California, Florida, Georgia, Indiana, Illinois, Louisiana, Maryland, Michigan, Mississippi, Missouri, New Jersey, New York, North Carolina, Ohio, Pennsylvania, South Carolina, Tennessee, Texas and Virginia. Residents of other states can call a toll-free number to find out if they are eligible for the new mortgages. For More Information: