Apologies for all the typos. I’m in a rush.

Lisa Bates is an associate professor at Portland State University. The piece of hers I decided to read and report on is:

Bates, Lisa K. and Triplett, Stacey, “Getting Your House in Order: A Model for African-American Financial Education” (2014). Urban Studies and Planning Faculty Publications and Presentations. Paper 82.
http://pdxscholar.library.pdx.edu/usp_fac/82

This is a research report rather than a journal publication, but I like it so much and I think it’s so important that I wanted to circulate it anyway. The report examines how to develop financial training that helps African Americans attain home ownership. If you don’t understand why this is an issue, then you haven’t been paying attention. Banks may make a big show out of your down payments supposedly being the product of savings and not a gift, but most people get their downpayments from their parents or grandparents, who are homeowners themselves. When that isn’t true for you, being able to pull together enough money for a downpayment, particularly in the super heated markets along the coasts, can be an insuperable challenge.

On top of that, if you have never had parents, or known anybody else, with a mortgage who can help you, you face a bewildering array of issues when dealing with mortgages, and absolutely positively none of the professionals engaged in the industry have your best interests at heart. This is particularly true for black credit-seekers. Sometimes you get a really good mortgage broker in the mix–I did like and respect mine because he is a no-bs guy of guy–but honestly all of them are steeped in the industry jargon and blather on about things that make no sense to those of us outside the game: “You’ll be paying points if you do that.” Huh? The whole system is extremely byzantine, so that when you add the fact that it is stacked against black families, it’s hard to tell when you are being presented with wealth-stripping evil versus a decent deal that reflects your real credit-worthiness.

The gap in home ownership between black and white Americans is 45 to 76 percent, and that gap goes a long ways to explain differences in intergenerational wealth:

Persistently low homeownership rates contribute to the Pew Center’s finding that the average African American household has a net worth of just $6,446 compared to $91,405 for an average white household (2013).

There are many reasons for these differences, but most come down to discrimination in labor, housing, and financial services markets.

The rest of the report describes an educational program designed to foster financial skills tailored towards Black Americans and their experiences with white-dominated lending institutions, as well as ‘developing a healthy relationship’ with money. They use focus groups to evaluate the issues and the ideas that need to come into training directed at helping people get their finances set. One persistent finding was, simply, that most black participants over-estimated their credit rating. Frankly, I am surprised ANYBODY guesses their credit rating properly. Talk about a rigged game.

The training topics that emerged stress ways of thinking and feeling about money as well, in a way that reaffirms individuals’ entitlement to use their money for their own priorities and security.

The results here are good: some debt reductions–I have no idea what would be sizable here– and increases in savings and credit scores among participants. One quote I thought was particularly apt:

“I learned more how to protect my credit…being comfortable to sit in front of this guy that doesn’t look like me and ask him questions before I apply for something, because I’m more informed. And so I feel more empowered…And I’ve built myself up.”

This strikes me itself as a pretty good use of education. Congratulations!