ST. LOUIS — BJC HealthCare and Washington University in St. Louis are expanding their “Live Near Your Work” program to support employees and revitalize underserved neighborhoods. The program now offers forgivable home loans, benefiting employees and communities.
“The Live Near Your Work program was designed to ease the financial burden of buying a home for BJC and Washington University employees, while helping to improve the economic health of our region,” said Deidre Griffith, BJC vice president of community health improvement.
This program, open to all eligible employees, now offers $12,500 forgivable home loans, a significant increase from the program’s inception in 1997. The expansion includes neighborhoods hit hard by historical disinvestment, particularly in the City of St. Louis and North St. Louis County, aligning with local initiatives to advance racial equity and economic opportunities.
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Applicants can use the forgivable loan toward a down payment or closing costs, with the loan forgiven after five years if the employee continues to live in the home and maintains a benefits-eligible position at BJC or Washington University.
Lisa Weingarth, senior advisor for St. Louis initiatives at Washington University, emphasized the institutions’ commitment to making St. Louis a healthier and more prosperous place for all. “We do that by delivering excellent patient care to the region, supporting local businesses, and expanding economic and educational opportunities for our combined workforce of more than 52,000 employees,” Weingarth stated.
The “Live Near Your Work” program has been around for 26 years, with BJC and Washington University consistently increasing its budget, eligible neighborhoods, and loan sizes. Today, both institutions allocate $300,000 each per year to support the program.
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As part of its broader affordable housing initiatives, Wells Fargo will sponsor a homeownership program alongside the Asian Real Estate Association of America.
The Wells Fargo-AREAA alliance will focus specifically on sustainable homeownership for first-time homebuyers and low to moderate-income Asian American, Native Hawaiian and Pacific Islander (AANHPI) communities.
AREAA found in its annual report that 72% of White Americans own homes. Yet, there are several Asian subcategories where homeownership is 55% or less, including Native Hawaiian, Indonesian, Korean, Pakistani, Hmong, Sri Lankan, Burmese, Bangladeshi, and Nepalese.
Additionally, the initiative will also feature a housing affordability symposium as well as regional events across the U.S. for homebuyers.
“We are committed to being a part of the solution and breaking down the systemic barriers that make homeownership more difficult to attain,” said Valeria Esparza-Chavez, head of Home Lending, Asian Segment at Wells Fargo.
The partnership comes after the bank was hit by several scandals related to its lending practices.
The bank repeatedly misapplied loan payments, wrongfully foreclosed on homes, illegally repossessed vehicles and charged surprise overdraft fees, affecting 16 million customers’ accounts, according to the CFPB. Wells Fargo eventually agreed to pay $1.7 billion to settle multiple consent orders last December.
Additionally, Bloomberg reported in March 2022 that only 47% of Black homeowners who completed a refinance application with Wells Fargo in 2020 were approved, compared with 72% of white homeowners. (The bank denied any wrongdoing.)
Since then, Wells Fargo announced plans to invest an additional $100 million to advance racial equity through its $210 million special purpose credit program.
Earlier in April, the bank announced a 10-year partnership with Dallas megachurch affiliate T.D. Jakes Group to build “inclusive communities.”
WASHINGTON — After years of proposals, counterproposals, interagency disagreement and political intrigue, the Federal Reserve, Federal Deposit Insurance Corp. and Office of the Comptroller of the Currency appear poised to finish their modernization of the Community Reinvestment Act’s implementing rules.
FDIC Chairman Martin Gruenberg said last fall that he expected the three agencies would finalize a joint rule updating the CRA in early 2023. But the intricacies of the rule, a shake-up of leadership and a string of midsize bank failures this spring likely contributed to pushing back that timeline, according to Jesse Van Tol, CEO of the National Community Reinvestment Coalition.
“You had a mini banking crisis in the spring that certainly pulled people away from this. You had a leadership transition at the Fed as well with [former Vice Chair Lael] Brainard’s departure, [and] you’ve gotten new Fed governors who came on board.” he said. “The light at the end of the tunnel is here, and I think we will see the final rule in October.”
Congress passed the CRA in 1977 as a way to address de facto lending discrimination faced by communities of color. The act requires that banks be graded on how equitably they are lending to low- and moderate-income customers and neighborhoods in their service areas, typically determined by where they have branches and deposit-taking automated teller machines. Banks need to receive a satisfactory mark in order to merge with or acquire other banks.
Given the advent of mobile banking, both banks and community groups have long agreed on the need to update the CRA — the most recent comprehensive overhaul of the rules was conducted in the 1990s.
Former Comptroller of the Currency Joseph Otting previously attempted to reform CRA implementation during the Trump administration, but community organizations argued the proposal effectively allowed banks to ignore underinvested communities and they threatened to sue the OCC when the plan was finalized in 2020. Otting’s proposal also failed to gain the support of Fed officials. The Biden administration then took on the task of reform, starting from scratch under the leadership of former Brainard.
The banking agencies issued a notice of proposed rulemaking in May 2022, but banking trade organizations raised a variety of concerns about the proposal. Banks argued that it would be too difficult to attain satisfactory ratings under the change, particularly under the retail lending portion of CRA exams. Banks also argued that the 90-day comment period was too short for banks to meaningfully respond to the proposed changes under the Administrative Procedure Act and hinted at a legal challenge if the rule was finalized as written.
Banking groups on Tuesday asked regulators to delay issuing the final joint rule due to uncertainty created by a constitutional challenge to the Consumer Financial Protection Bureau’s funding structure and by the recent capital changes regulators have proposed as part of the Basel III accords.
But the regulators appear unfazed by that criticism. Ian Katz, a Washington analyst with Capital Alpha Partners, said that may be due in part to the closing window of opportunity that regulators have to finalize the rule and avoid a congressional repeal after the 2024 election. The Congressional Review Act allows Congress to nullify a regulation within 60 legislative days of its finalization with a majority vote in both chambers and approval of the president. Katz said that a real threat of an override exists if Republicans win the House, Senate and White House.
“If the administration wants to make sure that the rule can’t be nullified by a Republican administration and Congress, it probably needs to finalize it by roughly mid-2024 to avoid the other CRA, the Congressional Review Act,” Katz said. “I think they’ll put it out before then.”
But in addition to racing against the clock, experts say regulators also have to take their time to ensure that the final rule is not vulnerable to a legal challenge.
“CRA is complicated, and the proposal gives the banks a lot of different pieces they can attack. The banks are also asserting that the regulators are going beyond their statutory authority and that the proposal, if unchanged, would be vulnerable to a legal challenge,” Katz said. “I imagine the regulators have been taking a look at that and will try to make sure they put out something that won’t be easy to strike down in court.”
Van Tol said the agencies are highly sensitive to industry concerns and have spent a lot of time making certain the law complies with statutory authority. To craft a durable rule, the agencies — particularly the Fed, which is leading the rewrite — are likely to take all the time they have. Van Tol said this puts pressure on regulators to ensure the rule withstands the test of time.
“Because the banking trades have threatened to sue them, I think they are trying to make sure that they’ve dotted the i’s and crossed their t’s in such a way that the rules are best protected,” said Van Tol.
Ye the delay in finalization can’t all be attributed entirely to industry pressure, Van Tol said. CRA-related rules have historically been very difficult to get done, in part because the details are very complex and also because they require interagency collaboration.
“It’s an interagency ruling, it’s much more complicated to coordinate amongst three agencies — two of whom have boards — who have to vote on the proposal,” he said. “The Fed [officials] are perfectionists. If you give them time, they’ll take it. They’ll take as much time as they need to get to something they’re satisfied with.”
Dennis Kelleher, CEO of the public advocacy organization Better Markets, said part of the problem is that industry turmoil and agency turnover made an already tedious process more difficult.
“I think anyone thinking it was going to be finalized earlier this year was overly optimistic,” Kelleher said. “It would have been record-breaking for them to do all that and finalize by earlier this year. While we always prefer rules to be finalized sooner than later, we’re more interested in rules being finalized that are effective, workable, durable and achieve the intended goal. If that takes more time than less, better to get it right than be quick about it.”
When reached for comment, officials at the OCC indicated they are working on the rule and incorporating public feedback.
“The OCC has been working with the Federal Reserve and FDIC to modernize and strengthen the Community Reinvestment Act to expand financial inclusion and opportunity for all Americans, especially the underserved,” they noted in an email. “The agencies received hundreds of detailed and thoughtful comments on the notice of proposed rulemaking, and we are working together to consider the suggestions.”
The FDIC and the Fed did not comment for this story.
Van Tol said that for all the bluster about a possible legal challenge, he is skeptical that banks would actually follow through on their threat to sue their prudential regulators over the rule.
“I think the trades sending that letter [on Tuesday] is just an attempt to continue to delay, which is really just an attempt to kill it,” Van Tol said. “It will be interesting to see if they do. I think it’s one thing to sue the CFPB; I think it’s another thing entirely to sue your prudential regulator. I wouldn’t want to be in that position.”
He added that banks also must toe a fine line in opposing the CRA, given how such a stance could contradict banks’ previous stated commitments to racial justice.
“Some banks will think twice — many of them having made statements about their commitment to racial equity, their commitment to the community in the wake of George Floyd — about suing over a rule that fundamentally is about lifting up underserved communities,” he said. “I think obviously that’s the reason why they work through their trades, to shield themselves from criticism.”
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JPMorgan Chase is expanding an effort to help close the gap in homeownership between Black and Hispanic communities and the rest of the country.
Residents of some 3,000 additional Black-majority and Hispanic-majority Census tracts in 16 U.S. markets will be eligible for up to $5,000 in grants that are designed to help with down payments and closing costs.
The program’s expansion, announced Wednesday, may help an additional 1,000 customers obtain mortgages, according to Cerita Battles, head of community and affordable lending at JPMorgan.
The bank does not expect to make a profit on the program, particularly as credit conditions worsen, she said. “At the end of the day, this is a long-term sustainable investment,” Battles said.
Chase Home Lending has already spent more than $30 million to help more than 6,000 prospective homebuyers in majority-minority neighborhoods make down payments and pay closing costs, according to the bank.
The $3.7 trillion-asset bank launched the effort in 2021 as part of a five-year racial equity commitment. The year before, nationwide protests sparked by the death of George Floyd prompted industry leaders to reconsider how they serve historically disadvantaged groups.
Following advice from regulators, JPMorgan launched a special-purpose credit program that provides mortgage assistance in majority-Black and majority-Hispanic neighborhoods. Under those programs, which are authorized under a provision of federal law, financial institutions can extend credit access to people who might otherwise be denied access to credit, or might be charged unfair rates.
When the bank rolled out the Chase Home Buyer Grant program, it looked first to provide credit access to Black Americans, who face the nation’s lowest homeownership rates. A year later, the program was extended to Hispanic Americans, a group that has the second-lowest homeownership rate.
The grants are made available to any resident of eligible majority-Black and majority-Hispanic neighborhoods — not only to members of specific racial groups — in part because residents of minority communities often fail to identify their race for fear that they may not receive a loan, Battles said.
The adoption of special-purpose credit programs has historically been stifled by criticism that they favor certain races over others. But attitudes have begun to change as regulators have assured banks that the programs do not violate the law, Battles said.
Blair Bernstein, a spokesperson for the American Bankers Association, reaffirmed the trade group’s support for special-purpose credit programs, calling them “an important tool that allows banks to expand access to credit for underserved communities.”
“Homeownership helps build wealth, and these important, responsibly managed programs provide opportunities for more borrowers, particularly as the cost of homeownership rises,” Bernstein said.
Yet, there are still some who question JPMorgan’s program, Battles said.
“There’s still a lot of education that’s still necessary, because all lenders are not participating in this space today,” she said. “I think it’s very necessary for us to be very intentional about our explanation around it — the how and why.”
JPMorgan has gotten support from nonprofit groups that focus on closing the homeownership gap.
“Homeownership is one of the most important ways to build generational wealth that families can pass down,” said Valerie Navy-Daniels, senior vice president of resource development at NeighborWorks America, a nonprofit organization that supports housing access and affordability. “We thank Chase and other banks for addressing this critical issue.”
Battles said that JPMorgan will be encouraging local market participants to support and promote the Chase Home Buyer Grant program and similar initiatives. She noted that funding from other institutions can be layered on top of the $5,000 grant.
“I would assume that we will likely expand this, expand this program again and go into some other markets, especially if we see the need in the value of going into those particular markets,” Battles said.
To those who doubt whether the grant program makes financial sense, Battles said: “There’s a cost to not being able to serve all who aspire to homeownership.”
Wells Fargo and T.D. Jakes Group announced a 10-year partnership aimed at “revitalizing neighborhoods” and creating long-term change in communities most in need.
The announcement comes a year after Bloomberg reported that only 47% of Black homeowners who completed a refinance application with Wells Fargo in 2020 were approved, compared with 72% of white homeowners.
The partnership with T.D. Jakes, a prominent Black minister who leads a Dallas-based megachurch, will focus on initiatives including affordable housing, small business development and financial education.
Over the next 10 years, the partnership could result in “up to $1 billion” in capital and financing from Wells Fargo and grants from the Wells Fargo Foundation, the companies said.
“This alliance with our organization allows us to further our four decades-long work to provide economic justice, eradicate food deserts, construct desirable workplaces and affordable housing, closing the digital divide and ultimately help families leave a rich and lasting legacy for the next generation,” T.D. Jakes said in a statement.
In its first project, Wells Fargo plans to support the revitalization of the nearly 100 acres of Fort McPherson, the historic former army base in Atlanta, Georgia.
“This strategic partnership goes beyond a one-off capital investment and underscores our continued commitment to diverse and inclusive communities,” Charlie Scharf, CEO of Wells Fargo, said in a statement.
T.D. Jakes Real Estate Ventures began purchasing the site in 2022 to create commercial and residential spaces. The plans include mixed-income housing in the form of single-family homes, townhomes, and apartments.
The partnership represents Wells Fargo’s largest minority home lending and development initiative to date. It also follows several scandals related to its lending practices.
In December, the bank agreed to pay $1.7 billion to settle multiple consent orders related to automobile lending, consumer deposit accounts and mortgage lending with the Consumer Financial Protection Bureau (CFPB).
The bank repeatedly misapplied loan payments, wrongfully foreclosed on homes, illegally repossessed vehicles and charged surprise overdraft fees, affecting 16 million customers’ accounts, according to the CFPB. Consequently, the regulator ordered the bank to pay more than $2 billion in redress to consumers.
Bank executives at the time hinted that they would be shrinking Wells Fargo’s mortgage footprint and exiting the correspondent channel, where it was the largest lender and bought billions of dollars in government agency loans, an engine of homeownership for minority communities.
In January, the bank said it would continue to be the primary mortgage leader to Wells Fargo customers and minority homebuyers through its mortgage retail team. Wells Fargo also announced plans to invest an additional $100 million to advance racial equity through its $210 million special purpose credit program, which came in the wake of the Bloomberg report in March 2022.
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It has never been easier to open a bank account, especially with the spread of online services, but there has also never been so much choice about where to put your money. If you’re overwhelmed by your banking options, think about your ability to shape social change with your money. Now is a great time to consider becoming a customer at a socially responsible bank.
What is a socially responsible bank?
Corporate social responsibility is the self-regulation that businesses do to help promote a positive impact on environmental or social issues, such as racial equity.
In the banking industry, social responsibility refers to the ways banks can reduce harm or create opportunities for good. For an eco-conscious bank or credit union, that might mean it doesn’t invest in oil pipelines, deforestation or fossil fuels, or it might invest in alternative energy, plant trees or buy carbon offsets. Other banks or credit unions might be committed to equity goals by providing financial literacy programs to their communities or by giving more loans to minority-owned small businesses.
Why does it matter where I put my money?
It’s easy to imagine that the money you keep in your savings account, checking account or certificate of deposit is just waiting for you to use it. But your bank or credit union is using your money behind the scenes to lend to or invest in businesses or other customers. So even if you aren’t directly giving money to an oil refinery or company that’s clearing the Amazon rainforest, your money could still be supporting those initiatives.
There has been a long history of discrimination in the U.S. banking system against people of color, and you can put your money with a bank or credit union that’s working to support these marginalized groups. Elizabeth Vivirito, a financial services consultant who specializes in diversity, equity and inclusion, or DEI, research, says she has observed more robust changes in the banking industry around racial equity since the murder of Black man George Floyd by a Minneapolis police officer in May 2020.
“We see more people caring about where their money goes and what it’s funding,” Vivirito says.
How do I know what my bank is investing in?
It can be hard to know what a bank is doing with your money, but there are some ways to tell.
First, look at the bank’s website. Does it make any statements about its DEI goals? Does it explicitly say whether it invests in certain industries? Has the bank gone through any third-party certification processes, such as becoming a certified B Corp or joining 1% for the Planet or the Global Alliance for Banking on Values? These certifications and memberships each have goals and member requirements around sustainability and equity.
Once you’ve looked at the bank’s website, do a web search of the bank plus any keywords that you’d like to investigate, such as “social impact” or “community.” This should help you find specific statements or reports from the bank as well as any news or accountability reports from other sources that are keeping tabs on the bank’s efforts.
Note, too, that some banks are changing; they might be divesting from certain industries or adding programs to help people who have been historically shut out of banking services.
How can I find a socially responsible bank?
First, decide what social responsibility means to you. Do you want a bank committed to fighting climate change? In that case, you may want to choose a bank or credit union that is Fossil Free Certified, a certification from Bank Green. Do you want to combat financial racism and put your money into businesses that promote equity? Vivirito recommends looking into the history of your bank or credit union to see whom it was created to serve and what its mission is.
“The leadership, strategy and language of the institution should represent their community,” Vivirito says.
If you haven’t made any moves to open a new account and you’re looking for a simple way to be more socially conscious with your banking, Kara Pérez, founder of financial education company Bravely Go, says one of the easiest things you can do is move your money from a large national bank to a local credit union, which will use your money to support other local people, programs and businesses.
“Thinking about your money in a bigger picture way can help you make better decisions with it,” Pérez says. “Every dollar has power to shape our world.”
This article was written by NerdWallet and was originally published by The Associated Press.