Citi expands program to increase homeownership in various communities

Citi is expanding a program to boost homeownership in various communities as part of a new series of initiatives to expand access to its credit products.

The program, called home run, is designed to help address key barriers to homeownership, particularly in terms of cost and affordability. The program, which offers down payments as low as 3% with no mortgage insurance requirement, is combined with a lender-paid assistance program that helps offset closing costs.

Separately, citi is launching two new pilot projects aimed at providing more access to credit for people with limited or no credit information and access to capital for owners of small businesses in los angeles, with a focus on businesses owned by women, minorities and veterans.

According to lisa frison, who serves as director of financial inclusion and racial equity for U.S. Personal banking at citi, the steps are part of a traditional focus on financial inclusion and racial equity.

"In all initiatives, creating access to the financial mainstream is essential," frison said.

"But helping communities create assets, that's transformative, and homeownership is one of those things," she said.

Lenders seek to "better serve" diverse communities.

The news comes from citi the bank of america recently announced it plans to offer new mortgage products with no down payment or closing costs to help members of predominantly minority communities buy homes.

"Our affordable community lending solution will help make the dream of sustainable homeownership a reality for more black and hispanic families, and is part of our broader commitment to the communities we serve," AJ barkley, head of neighborhood and community lending at bank of america, said in a statement.

Research finds black homeownership has declined. If black homeownership rates were the same today as they were in 2000, they would be 770.000 more black homeowners according to urban institute data.

Even as homeownership rates in the u.S. Rose to record highs in 2020, black homeownership was still lower than it was a decade ago, according to the national association of realtors. The research found that black americans continue to face significant barriers that prevent them from buying homes, including high levels of student loan debt.

As mortgage lending activity has cooled noticeably this year, this could give financial institutions an opportunity to tap into new markets.

"It may be that mortgage loans at some of these institutions now have the ability to better serve some of these communities," said keith gumbinger, vice president at HSH, a market research firm.

Who qualifies for citi's credit program??

Citi community's affordable credit program homerun is eligible for low to moderate income borrowers based on census data. According to frison, this typically includes borrowers who have less than the median family income.

With program expansion, citi expands both income and geographic eligibility.

The program currently targets borrowers with less than 80% of median family income, a number that will rise to less than 120% of median family income based on census data.

"It's really going to give a lot more people the opportunity to take advantage of it," said frison.

Citi also plans to expand the geographic presence of the program. Homerun is currently available in cities such as san francisco, los angeles, new york, miami, washington, DC and chicago.

A "for sale" sign hangs on 21. June 2022 in front of a home in miami, florida. According to the national association of realtors, existing home sales fell 3.4% to a seasonally adjusted annual rate of 5.41 million units. Sales were 8.6% lower than in may 2021. As existing home sales declined, the average price of a home sold in may was 407.$600, up 14.8% from may 2021.

It will be available in additional markets, including atlanta, austin, denver, dallas, houston, philadelphia and cambridge, massachusetts, with a special focus on census tracts for majority minorities in those markets.

No private mortgage insurance is required, which can allow homebuyers to use the money they save to either reduce their monthly mortgages or buy more homes, frison said.

It is available to first-time homebuyers as well as those who have previously purchased homes or are looking to refinance. It can apply to the purchase of a one- or two-family home, as well as condominiums and cooperatives.

In addition, the lender-paid assistance program provides eligible borrowers with a loan to help with closing costs. That is increased from 5.000 $ to 7.500 $ increased.

To expand access to credit for homeownership, citi will look for alternative methods to evaluate creditworthiness, frison says. When a credit score is not available, other factors such as rent and utilities are considered to assess an applicant's ability to repay their debt and become a successful homeowner.

In addition, citi is also hiring a group of community loan officers who will have ties to the community, including partners and affordable housing real estate agents, specifically various real estate broker associations.

"We're going to work hard to reach deep into communities to make sure this message is heard," frison said.

More access for the "credit invisible"

At the same time, citi is also launching two new pilot projects aimed at making credit cards available to populations considered "credit invisible," as well as a special loan program targeting small businesses based in los angeles.

Both initiatives are scheduled to launch in early 2023 and are part of project reach, which is led by the office of the comptroller of the currency and promotes expanded financial inclusion through access to credit and capital.

Citi's invisible credit program aims to underwrite and approve credit cards for people who have no credit information only.

The program determines if other data is available to approve a loan application for applicants not approved through the traditional underwriting process.

Black small business owners expect to borrow more than average, but are less confident about access to capital

Research from the brookings institution has found that 46% of blacks and 32% of hispanics are either unbanked or underbanked, compared to 14% of whites.

Without access to traditional credit services, many who either don't have a bank account or don't have one turn to these more expensive products like payday loans. The average interest rate on a payday loan, according to data from the st. Louis federal reserve off 2019 391%, compared to 17.8% for the average credit card.

"A credit card is one of the most basic necessities from a financial management perspective, and being able to offer that option is something we're interested in," frison said.

Citi will also begin providing technical assistance resources and access to capital for los angeles-based small business owners early next year, with a special focus on women entrepreneurs, minority and veteran entrepreneurs. The goal is to expand this program to other markets in the future.

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