There are few things that can build equity and future financial stability like homeownership. However, our nation has a fraught history when it comes to equal access to homeownership, lending, and building credit. “It’s, at times, a very dark history when it comes to the treatment of people of color and the issue of building wealth, income, and equity,” said Sheryl Taylor, Vice President, Sales Manager, Community Home Lending with First Merchants Bank. “These are all things that play into a person’s ability to purchase a home. So we see – even today – the echoes of that history and those barriers in current homeownership rates between certain ethnicities.”

According to the U.S. Census Bureau, as of the fourth quarter of 2022, 44.9 percent of African Americans own their own home as compared to 74.5 of their white counterparts. 50 years ago, those numbers were 30 percent and 65 percent – a 27 percent gap as opposed to today’s 29.6 percent.

“We’re actually further behind with white ownership and black homeownership than we were 50 years ago, despite the passing of the Equal Housing Act,” Sheryl explained. “So why haven’t things changed? I think it’s because policies don’t really change things – people do. So, while the Equal Housing Act put great protections in place for minority homeowners, you must pair that protection with people and institutions who are really working to make a difference – as opposed to just checking a box and doing the bare minimum.”

It's an issue First Merchants has worked to address directly by digging into the complicated history of housing and by implementing policies and programs to correct those issues. That includes the creation of our Community Home Lending and Corporate Social Responsibility teams, which actively seek to untangle the complicated knot of the issues people of color and first-time homeowners face and to provide equitable resources to help them succeed.

“You know, you have to consider issues that have impacted multiple generations like redlining,” Sheryl said. “Even though it’s now thankfully outlawed, the fact that no one in redlined areas could get a mortgage, or that homes in those areas were devalued and couldn’t build equity or couldn’t get loans to build credit – that creates a lack of generational wealth and financial knowledge that still impacts young people today.”

While redlining is now an illegal practice, there are other challenges that can make becoming a homeowner difficult for people of color – such as the stricter policing and higher rate of incarceration that has existed in communities of color, which can cripple someone’s ability to build good credit or seek gainful employment.

“There are also the predatory lending practices that came to a head during the 2008 recession,” Sheryl shared. “That disproportionately affected people of color. There is also the fact that people of color may have to take out more money in student loans in an effort improve their prospects – all of these things are compounding and can make it really difficult to have access to homeownership.”

So what is the solution? For Sheryl, it starts with representation.

“I think one of the reasons we still feel the effects so strongly is because of a lack of people of color working in the mortgage industry,” she said. “When you don’t have that representation in an industry, it makes it harder for that industry to take the challenges of specific groups into consideration, and that can lead to unfavorable policies and practices.”

Financial education can also go a long way towards healing the wounds of the past.

“We have generations of people who didn’t understand homeownership and didn’t have a chance to be homeowners – so the knowledge wasn’t passed down,” Sheryl explained. “There are many people of color who could buy a house but aren’t aware that they can purchase a home. So financial education is a really important piece of helping to improve that homeownership gap.”

It’s one reason First Merchants recently launched a comprehensive financial wellness program, and why the bank continues to partner with homeownership advocacy groups by volunteering, teaching financial education workshops, and philanthropic support.

But these measures also need to be paired with programs and policies that aim to close the homeownership gap, like First Merchants’ Next Horizon Mortgage Program.

“This is a program that actively seeks to correct the wrongs of the past,” Sheryl shared. “It doesn’t require a down payment, offers grants for closing cost assistance, has a below-market interest rate, no private mortgage insurance, and can use alternative means to establish credit. These are all things that can really boost the ability of first-time homebuyers’, including people of color, to acquire a mortgage and purchase a home. It is one big step toward building financial freedom and generational equity.”

And it’s work we’re proud to do.

“I really love that we provide solutions for these issues, and we care about our diverse communities,” Sheryl said. “We’re dedicated to helping our customers prosper – and there’s nothing that brings equity and prosperity quite like homeownership.”

Want to learn more about the ways we’re supporting our communities and advocating for equity and inclusion? Check out our Corporate Social Responsibility page.