Minorities advance, but have far to go Black brokers group sets out goals at Baltimore convention

Credit scoring criticized

August 16, 1998|By Robert Nusgart | Robert Nusgart,SUN REAL ESTATE EDITOR

They came to Baltimore to celebrate the 30th anniversary of the Fair Housing Act.

They came to say that 30 years later, the opportunities for African-Americans to enjoy homeownership have become greater.

But they also came to say that their organization -- the National Association of Real Estate Brokers Inc. -- must become more visible and outspoken because there is still much more work to be done on behalf of minority sellers, buyers and brokers.

More than 600 members of NAREB, commonly known as Realtists, gathered for their 51st national convention at the Omni Inner Harbor Hotel last week to discuss the state of their organization, which was formed in 1947 after black real estate agents and brokers were denied access to the National Association of Realtors.

"It is important that organizations like the National Association of Real Estate Brokers, NAACP, the Urban League be there because they are the voice of their members, and it's going to continue that way for some time," said NAREB President H. Bernie Jackson of Baltimore.

"There is no question that it [has become] easier because our homeownership rate has gone up from 30 percent to around 64 percent," said Jackson, who will continue as president of the association through 1999.

"But now we are finding that there are other problems associated with that."

Echoing some of the same feelings was Donnell Spivey, president of the local chapter and a top producing agent with Re/Max Columbia.

"Yes, things have gotten better, but there are still a lot more improvements that are needed," Spivey said. "There are a whole list of issues that this organization is trying to fight for. We have to take each one on its own merit and try to work through them."

Among the issues that Jackson and Spivey addressed:

* Minorities not being able to obtain market-rate mortgages.

* Credit scoring in the mortgage application process that may be detrimental to minorities.

* A need to increase homebuying education and counciling.

* And, said Jackson, "providing opportunities that are equal for our members across the country."

Jackson said that some lenders may steer African-Americans into loan programs that favor a lender's bottom line.

"We find that the average person might be able to get a mortgage with an interest rate of 7 1/2 percent, and somehow the African-American ends up with an 8 1/4 ," Jackson said.

"The only thing that they [the lenders] are looking at is the end result to make more dollars. They may try to put the African-American into the easiest program, and sometimes that is HUD [loans], and we look at that as discrimination also."

But the issue of credit scoring, according to Spivey, could have far-reaching implications for minorities.

Credit scoring -- used by mortgage lending giants Fannie Mae and Freddie Mac -- has become a controversial topic for the entire industry.

When a buyer applies for a mortgage and a credit report is sought, the buyer is assigned a numerical score -- based on credit models -- that indicates to the lender whether the applicant is creditworthy or a credit risk.

And many times, the score -- regardless of an applicant's payment history, special circumstances or explanations -- can be grounds for not approving a loan.

"The credit score is not the clear definitive of a person's ability to repay a loan," Spivey said.

"If you made a lot of inquiries [for credit], it affects your credit score. If you have a certain kind of loan, it affects your credit score.

"What we are afraid of is that FHA [insured loans] may follow Fannie Mae in terms of using credit scoring. And there are more minority buyers using FHA than Fannie Mae.

"So, if FHA follows them, there will be a great impact."

The upside to credit scoring is that for buyers with good or excellent credit, it makes loan approval for lenders almost instantaneous.

"Credit scoring is not something that we are dismissing or that we are not endorsing overly. We understand it," Jackson said.

"We will utilize it because it is a tool that can make the process of homeownership a lot quicker. Technology has its price.

"This is not to say there should be two standards, but make sure that one standard is not universal. There are cultural norms that may be standard for one, but not for the other."

Both Jackson and Spivey said that NAREB, which says it is the oldest minority trade union in the country, is committed to improving the educational and counciling aspects for its members and homebuyers.

"We need more education for our communities," Jackson said. "We have to educate them on what is best for them. We want to make sure that when [minorities] go in a house they understand that they should not go in there and then buy a new car.

"If anything, we want to make sure that they are budgeted, and we want to make sure that we stay with these buyers for a couple of years."

Yet Jackson and Spivey know that help for their members and minorities can come only if they are able to raise the level of awareness for their organization and increase the market share for the number of people served by the brokers association.

The real estate community has to "accept us as having the ability to serve the general public [just] as NAR does," Spivey said. "They have not accepted us as having the ability. We have to work twice as hard to get the same amount of business as other agents.

"If no one does anything, there is nothing that is going to be done. It is this organization that is doing something to help the minority Realtors and appraisers and loan officers to have a voice.

"And we have to do it in numbers to be heard."

Pub Date: 8/16/98

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