Brick by Brick
This regional community affairs program is about exploring solutions to complex problems in Southwest Ohio. This podcast is a companion piece to our larger project. Visit https://www.cetconnect.org/BrickbyBrick/ to learn more.
Brick by Brick
Can We Bank on Financial Institutions to Create Affordable Housing?
It’s getting increasingly harder to find an affordable place to live. Sky- high rents, fluctuating mortgage rates, expensive home prices and a shortage of housing are all contributing factors. Every year there are incentives for banks to create affordable housing. How much are they doing and is it making a difference?
Interview guests: Damon Allen, senior vice president Federal Home Loan Bank-Cincinnati; Susan Thomas, President Fifth Third Bank Community Development Corporation and co-chair National Housing Crisis Task Force, Roddell McCullough, chief corporate responsibility officer First Financial Bank; Kenya Taylor, vice president community manager Chase Bank; Elisabeth Risch, executive director Housing Opportunities Made Equal (HOME)
Please give us your feedback:
Ann Thompson:
Buying a house is at the top of the list for many.
Damon Allen:
I mean, it's called the American Dream for a reason.
Ann Thompson:
But unless you're flush with cash, you're going to need a bank. Last year, 74% of Americans borrowed money from a lending institution to buy a house.
Susan Thomas:
We view housing as being a basic human right.
Roddell McCullough:
It is important for us to be able to provide opportunities for everybody to do well, especially low to moderate income individuals.
Ann Thompson:
Banks hold about 3 trillion of the commercial real estate debt. Do they give mortgages to everybody they should?
Elisabeth Risch:
We know that there's been a gap and we need to work to reduce that gap between black and white homeownership in our region. The banks have a lot to do with this because that's how you get access to credit.
Ann Thompson:
Developers also rely on banks to move their projects forward.
Tim Gordon:
I think that was important to have strong local relationships because they're going to know the market, have a great deal of confidence in the market. That was helpful for us.
Ann Thompson:
Today on the pod, banks: the role they play in home ownership and community development with a variety of initiatives at all levels. Are they helping create more housing, including affordable? Let's get into it. This is Brick by Brick: Solutions for a thriving community.
Ame Clase:
Brick by Brick is made possible thanks to leading support from AES Ohio Foundation, Greater Cincinnati Foundation and George and Margaret McLane Foundation, with additional support from Laurie F. Johnston, Murray and Agnes Seasongood Good Government Foundation, The Robert & Adelle Schiff Family Foundation, and more. Thank you.
Ann Thompson:
Hello, and welcome to Brick by Brick, where we're highlighting solutions for a thriving community in southwest Ohio. I'm your host Ann Thompson. For many people, it's hard to buy a house right now. First time home buyers are older and richer than they were in the past. The National Realtors Association 2024 profile says first time home buyers are on average 38 years old and making more than they ever have. Why is this? Houses are more expensive and it's difficult to come up with a down payment. Chris Herbert is managing director of Harvard's Joint Center for Housing Studies.
Chris Herbert:
A lot of folks are going to the Bank of Mom and dad to help make that down payment assistance. But what do you do if you don't have the Bank of Mom and dad to go to?
Ann Thompson:
It means a longer timeline. The median down payment in 2024 was 9% for first time home buyers and 18% for repeat buyers. Most home buyers choose mortgage lenders for their loans. Mortgage companies are focused entirely on real estate. Even though they could close quicker, they might not have the lowest rate and specific loan programs that full service banks have, which focus on a variety of products. Banks also have to adhere to federal regulations, so lending standards could be stricter. Mortgage lenders are regulated by states, banks, credit unions and mortgage companies get low cost advances from a private cooperative system of more than 6,500 financial institutions that make up the federal home loan banks. This wholesale bank with $20 billion in resources offers its members lower cost advances and potentially helps them make more loans.
Damon Allen:
And the Federal Home Loan Bank of Cincinnati is probably the bank you've never heard of.
Ann Thompson:
There are 11 federal home loan banks in the US, including the one in Cincinnati where Damon Allen is a senior vice president. With these advances, financial institutions can manage their liquidity to fund additional loan growth to homeowners and developers. Allen says the bank's mission is really about housing affordability. The federal home loan banks help hold mortgage rates down through their advances to banks and are required to set aside 10% of net income for low and moderate income households. Here's how the Federal Home Loan Bank in Cincinnati representing members in Ohio, Kentucky, Tennessee, and beyond is making a difference. The Manse Apartments in Walnut Hills.
Damon Allen:
So in the fifties and sixties when you had the Green Book and you had racial segregation and all that, the Manse Hotel, which is in Walnut Hills, was a place where prominent African-Americans would come and stay when they visited Cincinnati, Thurgood Marshall, Jackie Robinson, Frank Robinson Eartha Kitt, the list goes on. So with the Model Group, a few years ago, probably before the pandemic, they converted it to 60 units of affordable housing for people over 60. Right here in Walnut Hills.
Ann Thompson:
The Federal Home Loan Bank gave the Model Group a grant of $1 million for the project. In 20 19, when tornadoes blew through Dayton, the bank granted $500,000 to help rebuild 64 households. Here's something else. This April, the bank launched a pilot program, the Hundred Homes Initiative. It's for people who live in mobile homes built before 1976.
Damon Allen:
We provide down payment assistance, so family living in a mobile home, we will give them a $50,000 grant so that they can get rid of that mobile home, decommission it so it can't be used by anyone else, and go purchase a site-built home or a manufactured or modular home.
Ann Thompson:
We have a link to participate in this program and others on our websites, cetconnect.org and thinktv.org. You can also check out other affordable housing projects, the Federal Home Loan Bank has helped to fund. Last year the US Treasury Department suggested the Federal Home Loan Bank should increase the 10% to 20% required for affordable housing to make even more of a difference. After all, they have 20 billion in resources. Alan says Cincinnati is not at the 20%, but it is above the required 10%.
Damon Allen:
Our bank since 2001, has voluntarily done more than our required 10%. But what no one talks about is included in that proposal were a couple of other mandates that would've threatened our business model.
Ann Thompson:
Things that would've resulted in less earnings. So 20% of a much smaller pie. He says. Last fall, the Consumer Federation America called on Congress to require the federal home loan banks to contribute at least 20% for its affordable home program. This spring senator Catherine Cortez Masto, a democrat from Nevada, went even further introducing a bill requiring the banks to contribute 30% to its affordable home program. Home buyer education and counseling is a component of the federal home loan bank's affordable housing program. Local banks also see education as key to helping people save up for a place to live. We say hi to Hernz Laguerre Jr.
Hernz Laguerre Jr.:
Yeah, and aspiring homeowners will eventually ask themselves this question, is home ownership right for me? And that's the exact name of an event in Dayton that is focused on figuring that out. For attendees, I spoke with some organizers of the event who shared that education can lead to home ownership. Take a listen.
We are here at the Wright Dunbar branch of Chase Bank in Dayton Mortgage loan Officer Michael Tolliver shares his own experience with housing When he was a kid.
Mikal Tolliver:
I feel like I never really had a place to call home. Me and my mom, we didn't move around a lot, but we moved enough to where I didn't get settled in one place,
Hernz Laguerre Jr.:
Which is why Michael sees himself in his clients.
Mikal Tolliver:
When I got to stay with my grandmother, she owned her condo and things like that, but that wasn't expressed and talked about in our house. The fact that she owned it or owning a home and the importance of that. So knowing what it felt like not to have that information now gives me incentive to make sure I'm giving people that information
Hernz Laguerre Jr.:
Is home ownership right for me. Event hosted by the Home Ownership Center from Dayton’s County Corp, the East End Community Services Chase Bank and more provides information on how attendees could make home ownership possible for them. Kenya Taylor is the vice president of community management and she shares what the event will provide.
Kenya Taylor:
So we're going to cover everything from owning a home, the mortgage process, the resources that are out there in the community and have everything here as a one-stop shop. So this is an opportunity, especially in the Twin Towers neighborhood where we're taking individuals from leasing homes and renting homes into that next stage of home ownership.
Hernz Laguerre Jr.:
These events are open to everyone, but there is a special emphasis on the Twin Towers Crossing neighborhood where renters are a part of a 15 year lease to own program. Every year. They rent during these 15 years, they accumulate credits to have an opportunity to own their home, but how do banks bridge the gap from renting to home ownership?
Mikal Tolliver:
So what banks provide is education and opportunity.
Kenya Taylor:
Banks are offering a lot of solutions and opportunities for potential home buyers and current homeowners also,
Mikal Tolliver:
And a part of home lending like I spoke about as we do provide financing and funds as well for people to be able to leverage a big amount of money to purchase a big asset.
Kenya Taylor:
If you don't know the resource, then we're going to find and get you connected to that resource or that service or that product.
Hernz Laguerre Jr.:
What are some of the other misconceptions people have about home ownership or the path to home ownership?
Mikal Tolliver:
So I think the biggest one is affordability, but there's down payment assistance programs and grants out there available for people to get into homes for very low upfront costs.
Hernz Laguerre Jr.:
But can anyone be a homeowner?
Kenya Taylor:
There is always a path to home ownership if you're willing to take it right? It's not always going to be grass and daisies. Maybe you have a little bit more work to do. Maybe you have some weeds we have to cultivate first. Anybody can own a home if you want to and you're willing to put in the work.
Hernz Laguerre Jr.:
And it's also about creating sustainability as Anita Schmaltz, vice President of Financial Wellness at the Home Ownership Center can personally attest to.
Anita Schmaltz:
I had talked with a housing counselor at the Home Ownership Center when I purchased back in 2005, and so the work that they do I know is really important to helping people understand what is affordable for their budget, what to look for and to make sure that you're looking at sustainable home ownership.
Hernz Laguerre Jr.:
Anita shares how banks have the opportunity to help remedy a historic lack of equity and access in our country
Anita Schmaltz:
Because of the history of redlining that there might not be loans that were being made in those neighborhoods. The ability to have capital so that you have people who are investing in their properties in those low and moderate income neighborhoods are incredibly important.
Hernz Laguerre Jr.:
Is home ownership, right for me? How do those events begin to remedy some of the negative effects that some banks have had, such as with predatory lending and stuff like that?
Anita Schmaltz:
I think anytime that you can get people educated about finances, budget, what products are available, that's a good thing. We need to talk more about it so that people understand what's out there and they're less susceptible to getting a bad product or a product that's not appropriate for them.
Hernz Laguerre Jr.:
That highlights the emphasis that Kenya and Michael were sharing earlier, that they want to leverage the presence of banks and neighborhoods to build thriving communities.
Kenya Taylor:
We are here to make an impact any way we can, a positive impact in this community, and we know Dayton, Ohio, there has been some struggles when it comes to housing, affordable housing. So I feel this is one step in the start of a continuous series and other partnerships we'll do in the future and different various communities to make sure we're hearing your voice, your need, and addressing your concerns so we can actually make a positive impact and hopefully a trajectory in home ownership, especially once we get more inventory and we know those things are coming.
Ann Thompson:
Thanks for that Hernz. This is a goal for so many people and through educational efforts like these, it appears that many can achieve it. How many of these events will happen in Dayton and how can people get connected?
Hernz Laguerre Jr.:
Yeah, they actually had their first event on April 29th, but like Kenya said, they are looking to continue these events throughout the year for more information about those events. You can reach out to the home ownership center from Dayton’s County Corp to learn more and to see your pathway to home ownership.
Ann Thompson:
Thanks, Hernz. We'll catch up with you in the takeaways.
Hernz Laguerre Jr. (12:03):
Look forward to it.
Ann Thompson:
When you go to a mortgage lender for a loan, can you be assured that your credit score will be the only determining factor? Cincinnati's housing opportunities made equal or home wasn't so sure and analyzed Home Mortgage Lending Trends in Hamilton County between 2018 and 2023, executive director Elizabeth Ris looked at the top 15 mortgage lenders.
Elisabeth Risch:
Some of our main findings are that black borrowers are underrepresented in mortgage lending, and so across the Hamilton County black population represents about 25% of the population. Our report found that over the last six years, only about 15% of loan applications, again from all mortgage loans came from black households. That's a pretty stark disparity.
Ann Thompson:
Home wants to increase black home ownership. It's just 34% in Hamilton County that compares to 74% of white home ownership. Holmes says the gap in Hamilton County is one of the worst in the us,
Elisabeth Risch:
But I think some of us experience and have seen gentrification like the West End Over the Rhine, those kinds of communities, over 60% of those borrowers over the last six years that have gotten loans went to white borrowers.
Ann Thompson:
So some people might say without digging into the data too much, well, maybe the banks were just looking at their credit and they couldn't afford a house.
Elisabeth Risch:
So we always advocate that banks should be lending responsibly and safely that we don't want to recreate housing crisis or the lending crisis from 2008 where a lot of people were given loans that didn't qualify. So the various laws really make sure that banks are lending safely and soundly and we're also advocating for that too. Our finding around denial rates, however, really found that when we just look at upper income borrowers, upper income, black borrowers are denied almost three times more likely than upper income white borrowers. And so across the board there are denial rates, but it's even worse for upper income borrowers, which kind of discredits like, well, it's not income.
Ann Thompson:
Risch has been having conversations with some of the lending institutions on how they could do better, like wider use of down payment assistance, interest rate buy downs, and opening more banks and communities of color. Some banks are already doing this like Fifth, Third and First Financial.
Coming up on Brick by Brick, local banks are active in creating affordable housing. In fact, one executive co-chairs the National Housing Crisis Task Force.
Susan Thomas:
I think what differentiates the task force from some of the other work going on with to housing is that it's very focused at the state and local level.
Ann Thompson:
That's ahead on Brick by Brick.
Ame Clase:
Brick by Brick is made possible thanks to the generous support of so many, including Diane and Dave Moccia, P & G, The Camden Foundation, The Stephen H. Wilder Foundation, Rosmary & Mark Schlachter, a donation in memory of Frank and Margaret Linhardt, The A. T. Folger Jr. Lowe Simpson Fund and more. Thank you. We couldn't do this work without you.
Mark Lammers :
Hey, we all have a different story even if we grew up in the same neighborhood or city, especially if we're talking about housing stories. Hi, my name is Mark Lammers, executive producer for Brick by Brick. Growing up, I lived on the west side of Cincinnati in a single family home, but I've also experienced apartment life in good and bad settings in a number of different cities. I learned a lot from those times in my life and from my journey as a whole. Now we want to hear about your housing story. That's the new audience question that's live on our show pages@thinktv.org and cetconnect.org. Log in and hit the green button to share your journey and what you learned from it. We hope to share some of your experiences and lessons as we move forward on Brick by Brick so we can all get smarter together. Thanks.
Ann Thompson:
Welcome back to Brick by Brick, president of Fifth Third Banks Community Development Corporation, Susan Thomas co-chairs the National Housing Crisis Task Force.
Susan Thomas:
The goal of the task force is to acknowledge the fact that we are having a housing crisis in our country right now. Over the last five years, the average home price is up 47%. There are number of rental units that are available for less than a thousand dollars a month has fallen by 24%, and we've seen certainly an increase in many of our areas with respect to people who are living on the street,
Ann Thompson:
The task force is very focused at the state and local level. For example, there are more than 800 housing trust funds in the US and they're all different
Susan Thomas:
And maybe say, we don't need 800 of these, or maybe if we do need 800 of them, at least 400 of them can look alike. And so how can we do that and create some efficiency and also elevate ideas that are really working while saving everybody resources and time on developing things that are either solving problems that aren't really what's happening in your community or putting together structures that don't really work in the broader housing ecosystem.
Ann Thompson:
She praises the Cincinnati Affordable Housing Trust Fund because the city, the county, and the funders have one fund on the same schedule for efficiency. Fifth Third Bank has taken a leading role in the redevelopment of the Dayton Arcade and Cincinnati's Walnut Hills as the equity investor. Trevarren Flats apartments anchored by Just Q’in and Caffe Vivace,
Susan Thomas:
Sort of the first market rate housing, rental housing that had been done in Walnut Hills in some time. And so we started there and have gradually worked down the block over time.
Ann Thompson:
Fifth Third works in nine neighborhoods that are part of its investment strategy and is continuing to look at adding new neighborhoods. From Fifth Third, we shift to another bank focused on housing. Cincinnati based first Financial also places the creation of affordable housing as a top priority
Roddell McCullough:
It’s in the DNA of our organization. It starts from the top.
Ann Thompson:
Roddell McCullough oversees First Financials’, community development and wants to make sure the bank is lending to homeowners developers and investing in communities.
Roddell McCullough:
Right here, right down the street from where we actually are is Logan Commons right in the OTR area. That was a senior affordable housing project that was really to provide housing for those our seniors that are income limited or income restricted, working with over to run community housing. We actually did the LPH Thrives, lower Price Hill Thrives and which was a scatter site, which was a combination of either historic redevelopment but then also new development.
Ann Thompson:
Logan Commons has 42 affordable apartments for seniors and Over the Rhine and LPH Thrives in Lower Price Hill is 47 affordable apartments in nearly a dozen buildings. First Financial is working under its community benefits agreement with a commitment through 2028 of 2.4 billion in lending and investments to low and moderate income clients. One pathway is through community development financial institutions.
Roddell McCullough:
So the Cincinnati Development Fund is a good partner of ours, so we work in the College Hill area. We work with the local CDC there to help them renovate some of the properties in that area. We also work with Citywide Development in Dayton, so CityWide Development in Dayton does a lot in terms of not necessarily in housing, but they do a lot of commercial redevelopment. So again, approving communities, helping them to benefit
Ann Thompson:
Something else, First Financial says it's extremely proud of having 30% of its branches in low to moderate income communities Here are details about another financial institution.
Key Bank based in Cleveland contributed $20 million this year to the $100 million Cleveland Housing Investment Fund. The fund is designed to create nearly 3000 housing units, including 100 for sale homes. A spokeswoman says it's a pilot project and could be expanded to other cities, so our Southwest City leaders may want to stay in touch on that one.
The limitations for increased housing supported by banks mainly come down to money. There are lots of ideas, programs and projects underway, but limited funding. Take for example, the Welcome Home program by the Federal Home Loan Banks. It provides $20,000 of down payment assistance to homeowners, but because the program is so popular, it's already out of money for the year.
First Financial mentioned another limitation-The government's 15% limit on public welfare investments. The bank says without this, it could do more affordable housing development. The government's reasoning for limiting the purchase of low-income housing tax credits and equity investments is to ensure the investments are safe and to prevent banks from becoming overly concentrated in a single area of investment. This limit does not apply on the lending side. Brick by Brick investigated a number of banking initiatives and we found too many to detail on this podcast. You can read about more of them on our websites.
That's where you can also tell your housing story. Go to cetconnect.org or thinktv.org and click on one of our big green buttons to share your own perspective and any solutions that you think we should all get behind. That's also where you'll find web articles, videos, and links to our TV docuseries.
Well, this was certainly a complicated topic, but I think a unnecessary episode and we welcome to the microphone Emiko Moore and say hello and Hernz Laguerre Jr.
Hernz Laguerre Jr. and Emiko Moore:
Hello
Ann Thompson:
It's time for takeaways and Hernz. I'm wondering what took us so long to do a banking episode.
Hernz Laguerre Jr.:
Yeah, because we wanted to do this topic pretty much since the beginning of the podcast, but it took us until episode 28 to really unpack it. And I think it's because there are so many components to banking, especially when you want to go through a bank to get a home, and honestly just home buying is just a feat on its own, right? So I want to take a situation that happened in Dayton with the Twin Towers Crossing neighborhood. Long story short, that was a neighborhood that was made affordable because of tax credits that the over land development company received, and they were able to make this neighborhood affordable for 15 years. Well, now we're at the 15 year mark, and through this Lease to Own program, all of the renters of those homes are now able to buy their homes. The only issue is they have no idea where to start.
So organizers from groups like the Home Ownership Center, Chase and other organizations, they're having a series of events called Is Home Ownership, right? For me, and this organization is pretty much hoping to have these events be education hubs to teach people, okay, how can you go about buying a home? How can we help you on your home buying journey? Because there's a lot of components and when you want to go through a bank, it is a lot of things to consider. So I think there should be more events like that in order to help people make sense of it.
Ann Thompson:
Yeah, it can be confusing. Emiko, what are your thoughts as you try to digest all the information?
Emiko Moore:
Well, according to Damon Allen, the senior Vice President of the Federal Home Loan of Cincinnati, he said their mission is really about housing affordability and they're required to set aside 10% of their net income for low and moderate income households. We have an affordable housing crisis right now. The US Treasury Department suggests bumping it up to 20% for affordable housing, and a senator in Nevada is saying 30%. So I think it seems reasonable that they could bump that number up and make it a larger number, even 15% or make it incremental. Certainly there are things that could make it more feasible. Alan mentioned that mandates included in the US Treasury Department suggestion could hurt their business model, but if they were able to revise those mandates, an increase seems like it could make a big difference.
Ann Thompson:
Now, the question I have is can we legislate our way out of the housing crisis? I don't know, Republican Tim Scott of South Carolina, a ranking member of the Senate Banking Committee, he's introduced the Road to Housing Act, and it's kind of short on specifics, but the committee realizes that layers of red tape are often preventing assistance from reaching those who need it. And so this bill would encourage local and innovative solutions to local problems, focusing on incentivizing success by rewarding efforts of housing and service providers or communities who reduce the number of people who are homeless, ensuring households utilize federal housing programs, have greater access to guess what, financial literacy, and it does more and proposes more. It is still in committee, so we'll have to keep an eye on that, and I'm sure the local lawmakers are as well.
Hernz Laguerre Jr.:
Yeah.
Ann Thompson:
Thanks for that, guys.
Emiko Moore:
Thank you.
Hernz Laguerre Jr.:
Cool. No problem.
Ann Thompson:
Coming up on the next Brick by Brick churches are repurposing their property to build affordable housing. Thanks in part to new YIGBY laws. Yes, in God's backyard.
Jeff Allenby:
The church has the property and kind of the willingness to transform some of their access land into affordable housing.
Ann Thompson:
What kind of a difference will this wave of incremental faith-based housing make? That's next time on Brick by Brick.
That's our show. If you like what you heard, please rate and review our podcast. It makes it easier to find. We hope you learned something, and if you did, please tell your friends and family about it. For firstly, Gere Jr. And Ako Moore, I'm Anne Thompson. We'll be back soon with more solutions. Take care.
Our show is produced, hosted an edited by me, Ann Thompson with reporting and story editing from Hernz Laguerre Jr. and Emiko Moore. Our Executive producer of Mark Lammers. Our show consultant is Gloria Skurski. Gabe Wimberly is our audio engineer and mixer. Zach Kramer runs the lights and cameras. Derrick Smith is our production specialist and Jason Garrison is our production manager. Kellie May heads up our marketing and promotions, along with Mike Shea and Bridgett Dillenburger. Elyssa Stefenson handles the website and Steve Wright is our designer. Bill Dean and Andres Kruza are the engineers for the show and our Chief Content Officer is Colin Scianamblo. Our music is from Universal Production Music. Brick by Brick: Solutions for a Thriving Community is a production of CET and ThinkTV, Southwest Ohio PBS member stations.