Report: African Americans received only 3.5% of all bank home loans from ’07-’19

PITTSBURGH COUNCILMAN R. DANIEL LAVELLE: “It is so bad that as of right now, if you’re White and decide to move into a Black community, you are more likely to get a mortgage than if you’re a Black person living in a Black community.”

Private banks practically ignoring Pittsburgh’s Black neighborhoods

Black people in Pittsburgh are getting little to no help from the private banking community, so says a recent study that has Pittsburgh Black Councilmen Rev. Ricky Burgess and R. Daniel Lavelle sick to their stomachs.

The report, “Inherited Inequality; The State of Financing for Affordable Housing in the City of Pittsburgh,” completed in partnership with Carnegie Mellon University, found that between 2007-2019, just 3.5 percent of the $11.8 billion in private bank mortgage loans in the city went to African Americans. And of that $11.8 billion, just 6.8 percent went to housing in so-called “minority neighborhoods.”

The report, released on Sept. 9, also found that when it came to financial investment to improve city neighborhoods, private banks had a field day investing in primarily-White areas like Shadyside, while public or government funding fueled investment in Black neighborhoods.

“After I had a chance to read this report, it became very clear to me that the banks and their lending partners and regulators have absolutely managed to oversee disinvestment of Black people, and more importantly, the Black community, over the last decade or more,” said a perturbed Lavelle at a news conference, Downtown, Sept. 9.

Reverend Burgess said the landmark study proves that “greedy corporations and financial institutions are literally starving the African American community in Pittsburgh.”

PITTSBURGH COUNCILMAN REV. RICKY BURGESS is perturbed at the latest report that Blacks only received 3.5% of all private bank mortgage loans in Pittsburgh from 2007-2019.

A total of 906 financial institutions provided mortgage loans from 2007-2019, but the study found that 551 of them did not approve a loan to an African American; they did, however, provide 1,974 home loans to Whites for $384 million.

“Their practices are a result in continued redlining,” Rev. Burgess said. “Their practices are inherently discriminatory and racist.”

“That is shameful,” added Councilman Lavelle. “It is so bad that as of right now, if you’re White and decide to move into a Black community, you are more likely to get a mortgage than if you’re a Black person living in a Black community.”

For context, Asian Americans received just 3.5 percent of the home loans in the city, like African Americans. But Asian Americans account for 5.7 percent of the city’s population, while Blacks account for 23.7 percent of the population. The disproportionate number of home loans to total Blacks in the city is eye-popping.

When it came to the average loan approval amount, Whites had almost double the advantage over Blacks ($142,818 vs. $81,553).

The report lauded Dollar Bank and PNC Bank for being the top two banks that provided home loans to African Americans in the 13 years the report studied. Dollar Bank approved $45.9 million in home loans, while PNC Bank approved $29.9 million.

“These homegrown banks figured out how to connect with African American borrowers,” the report read.

Nationally, just 44 percent of African Americans are homeowners, compared to nearly 75 percent of Whites. And owning a home is key to building wealth, as homes usually appreciate in value. According to the Federal Housing Finance Agency’s House Price Index, home values have appreciated an average of 3.6 percent each year since 1991, according to a report on the website Mortgage 300. The site also points out that while monthly prices on rentals can increase over time, the monthly mortgage usually remains constant, allowing homeowners extra earned income to go towards saving or other expenses, rather than housing. And when the mortgage is paid in full, the homeowner has a piece of property that’s worth, oftentimes, hundreds of thousands of dollars. That explains why the net worth of homeowners is 80 times higher, on average, than renters, according to the U.S. Census Bureau. It also explains why it’s essential for African Americans to have more access to homeownership, to help establish and build generational wealth.

The report also detailed how little private banks are investing in Pittsburgh’s Black neighborhoods when it comes to housing. Of the $11.8 billion in mortgage lending from 2007-2019, 93 percent ($11 billion) was spent in Pittsburgh’s 54 neighborhoods classified as non-minority.

In Shadyside, for example, a non-minority neighborhood, it received more private bank investment ($1.054 billion) than private banks awarded the 17 Pittsburgh minority neighborhoods combined ($807 million).

Shadyside is located within Council District 8, along with Squirrel Hill. Combined, private banks approved nearly $2.8 billion in mortgage loans in the district. District 7, which includes Highland Park and Lawrenceville, received $2.3 billion in private investment. But, not surprisingly according to the report’s authors, the two city districts that have a Black councilman and have the most Black residents received the least amount of private investment (Rev. Burgess, District 9, East Liberty, Homewood, Lincoln-Larimer —$451.7 million, Lavelle, District 6, Hill District, Manchester—$770.5 million).

It’s another story, though, when it comes to public investment. The primary sources of public funding for the city for housing are the Pennsylvania Housing Finance Agency, Housing Authority of the City of Pittsburgh, and Urban Redevelopment Authority. The report found that from 2010-2020, roughly $3.4 billion in funding was approved combined from the three public agencies. From that $3.4 billion, $1 billion was invested in Pittsburgh’s 17 minority communities, or nearly $200 million more than what private banks invested in those communities ($807 million) from 2007-2019. The council districts of Lavelle and Rev. Burgess led the way in public funding dollars invested ($655 and $593 million, respectively).

The report, which also was provided with pertinent participation from Parents Against Violence and the Lower Marshall-Shadeland Development Initiative, said it’s a myth that “affordable housing” is primarily funded through public means. In Pittsburgh over the past 13 years, private banks have invested three times as much as public agencies in housing—but for African Americans and African American neighborhoods, private investment can’t be counted on, according to the report.

At this rate, “naturally, it will gentrify Black communities,” Rev. Burgess said. “It will starve them of resources, and then when they are primed for takeover, they will lend money to White organizations and White businesses to gentrify Black communities. Despite our work, without the seismic change in the lending practices of the financial institutions, there will be no hope for the African American communities in Pittsburgh.”

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