WHY IS THIS NEEDED?
In the City of St. Louis,
residential lending north of Delmar makes up only 4% of residential loans made across the city.
Blue Dot = 10 White borrowers
Yellow Dot = 10 Black borrowers
Black Dot = 10 Asian borrowers
Decades of discriminatory housing policies and practices continue to perpetuate segregation and vacancy throughout the St. Louis region. In particular, African American neighborhoods face depressed home values and economic disinvestment which impedes re-development and prohibits families from building wealth through homeownership.
Research shows that housing prices in majority black neighborhoods are severely undervalued; with housing values nearly half the price of homes in all-white neighborhoods. Depressed housing values contribute to a cash market where financing the purchase of a home can be almost impossible. Without access to mortgage lending for purchase or home improvements, homes in black neighborhoods become vacant and fall into disrepair, while families lose out on becoming homeowners in their neighborhoods.
One reason loans are not being made is because of an issue called the “appraisal gap” – when homes in distressed neighborhoods are significantly undervalued, or the rehabilitation costs exceed a bank's appraised value of the property. The appraisal gap is a significant barrier to providing equitable access to badly needed financial resources in neighborhoods that need them the most.
The Gateway Neighborhood Fund removes barriers caused by the appraisal gap by providing loans to qualified borrowers to purchase and renovate homes in communities with depressed home values. All neighborhoods are worth investing in. Reinvestment in historically disadvantaged communities is critical to overcoming the lasting effects of discriminatory housing policies and practices.
Source: Perry A, Rothwell J, Harshbarger D. The Devaluation of Assets in Black Neighborhoods: The case of residential property. Metropolitan Policy Program at Brookings. November 2018. https://www.brookings.edu/wp-content/uploads/2018/11/2018.11_Brookings-Metro_Devaluation-Assets-Black-Neighborhoods_final.pdf. Accessed March 6, 2019.
financing options for homebuyers in distressed neighborhoods
Allowing current homeowners in distressed neighborhoods to access money for improvements
Creating a lending ecosystem that stabilizes neighborhoods and reduces vacancy
homeownership available to traditionally underserved communities
Homeownership is the most important tool for American families to build wealth that can be passed on to future generations. It is also well documented that higher homeownership rates help stabilize neighborhoods and build a sense of community. Unfortunately, it continues to be near impossible to secure mortgage financing in many disinvested neighborhoods in the City of St. Louis. The Gateway Neighborhood Fund is here to provide lending options to buyers in these neighborhoods where financing has consistently been difficult to obtain.
Our mission is to stimulate growth by providing equal access to capital in disinvested communities to build homeownership and household wealth.
Randen J. Click