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Kamala Harris has a $100 billion plan to close the black homeownership gap

According Harris, four million people of color would benefit from down payment assistance

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While housing issues didn’t come up in the presidential debates two weeks ago, Democratic candidates for president in the 2020 election continue to raise them on the campaign trail.

Sen. Kamala Harris announced a $100 billion grant program to address the racial homeownership gap at Essence magazine’s art and music festival on Saturday in New Orleans. The grants would assist people of color who have lived in historically redlined neighborhoods with down payments and closing costs.

Since the financial crisis of 2008, homeownership among African Americans has sunk despite the economy’s gradual rebound. According to the U.S. Census, African American homeownership peaked in 2005 at 49.7 percent and has steadily dropped since. It now stands at 41.1 percent.

According to Harris’s campaign, black homeownership has historically been repressed by a number of factors, including redlining, the practice of lenders refusing to issue mortgages to majority black neighborhoods. After World War II, the G.I. Bill provided homeownership opportunities to veterans, but people of color were largely excluded. During the housing bubble in the mid-2000s, African Americans were disproportionately targeted with subprime mortgages, which wiped out any home equity gains in the crash.

Harris’s grant program, which would be administered by the Department of Housing and Urban Development (HUD), would provide up to $25,000 or 20 percent of the loan value to people of color who’ve lived in historically redlined neighborhoods for at least 10 years. Families would need to buy a house for less than $300,000, make less than $100,000 annually, with some consideration given to those in high-cost metro areas. Individuals could not make more than $50,000.

The Harris campaign says four million people would benefit from the $100 billion grant program. While that program would address historic discrimination in housing, Harris is also proposing changes to how credit scores are calculated, which would make it easier for African American borrowers to qualify for a mortgage.

Since the financial crisis, mortgage lending has gotten incredibly strict. Harris’s proposal would add rent payments, phone bills, and utilities to the formula for credit scores because the current criteria—mortgage payments, student loans, credit cards, and auto loans—aren’t as common among African Americans, leaving many without a scoreable credit profile. Including rent payments and phone bills in credit score calculations would allow more people of color to build stronger credit, and thus have a better chance of qualifying for a mortgage.

Harris is one of four Democratic candidates for president with a formal housing plan. She previously introduced the Rent Relief Act in 2018, which uses a renters tax credit to reimburse taxpayers the portion of their rent that they pay above 30 percent of their income. Harris took heat from housing policy experts, many of whom believe a renters tax credit alone would simply drive up rents and benefit landlords more than renters.

Sen. Elizabeth Warren has the most comprehensive housing proposal so far, and it also includes down payment assistance for people of color affected by redlining. However, Warren’s plan does not provide specific amounts, except to use $2 billion to aid families of color who were targeted with subprime mortgages during the housing bubble.

Harris’s campaign picked up momentum after the debate two weeks ago when she effectively attacked Joe Biden’s civil rights record, resulting in a polling bump for Harris and a drop for Biden. It’s no wonder then that Harris would want to bolster her housing plan with a proposal to help address historic discrimination and civil rights.