On May 21, the sponsors of the Greater Cincinnati/Northern Kentucky Residential Mortgage Credit Project presented their recommendations for increasing home ownership opportunities for area minority and low-income home loan applicants.
The 18-month program was modeled on the recently concluded Greater Cleveland Residential Housing and Mortgage Credit Project, a community-based effort aimed at identifying and eliminating discriminatory practices in home buying. Like the Cleveland project, Cincinnati’s effort was sponsored by a coalition of business and civic groups. Program sponsors were:
Charles Cerino, senior vice president at the Federal Reserve Bank of Cleveland and a program sponsor, said, “The whole essence of the Greater Cincinnati project is to ensure that creditworthy applicants will be able to gain access to home ownership opportunities on a nondiscriminatory basis.”
According to Cerino, the impetus for the project came from community leaders who “felt that we had similar housing issues in Cincinnati as in Cleveland—and believed that the Cleveland project’s model would be useful for addressing these issues.”
The Cincinnati program involved 89 participants from various home buying industries, including real estate firms, lenders, appraisal companies, credit bureaus, and property and mortgage insurance firms.
Program participants reviewed the numerous steps in the home purchase process in order to identify the potential barriers faced by mortgage applicants. Participants then created task groups to investigate four critical areas of home purchasing: the appraisal function, credit reports/credit bureaus, initial contact with lenders, and the secondary mortgage market. Each task group was responsible for developing recommendations to eliminate potentially discriminatory business practices.
Many of the recommendations generated by the Cincinnati program focused on continuing education and training of industry professionals. Dan Domis, director of the Hamilton County Department of Community Development and chair of the Appraisal Task Group, explained, “Our committee was surprised to learn that training in fair housing and fair lending is not mandatory for appraiser licensure in Ohio.”
Domis said fairness issues are particularly important in inner-city areas, where neighborhoods often have mixed properties and mixed populations. “In Cincinnati,” said Domis, “we’ve found that inner-city properties are often inconsistently appraised.”
The appraisal report can have significant bearing on a lender’s decision to approve or deny a mortgage application, said Domis. Therefore, his group recommended that the State of Ohio require appraisers to have training in fair housing and fair lending practices. The Cincinnati program’s other recommendations include:
While commending the accomplishments of the Cincinnati project, Cerino noted, “The real value of this program is that 89 people came together to study the mortgage access process and left with a greater understanding of the issues involved in the borrowing, lending, and home purchasing areas.”
To order copies of the Cincinnati project Task Group reports, please contact Laura Kyzour at laura.l.kyzour@clev.frb.org or (216) 579-2846.