TAMPA, Fla. — People of color have long been denied access to loans in this country, making it harder to start businesses and buy homes.
ABC Action News in-depth reporter Anthony Hill is digging deeper to find out how implicit bias is preventing many people of color from getting loans and what one local organization is doing to level the playing field.
A key part of the American Dream is homeownership. It’s one of the ways many have passed down generational wealth, but many people of color have long complained of being locked out of that dream. Decades ago, banks refused to lend to minorities, but today the issue is implicit bias.
Dr. Sri Sundaram is the dean of the school of business at the University of South Florida. He says, there tends to be an assumption that Blacks and Latinos can’t or won’t pay on their loans. In fact, over the past decade, JP Morgan, Wells Fargo, Fifth Third Bank and Bank of America paid hundreds of millions of dollars in class-action lawsuits alleging they charged African Americans and Latinos higher interest rates. “Even though you have people who have really good credit scores and income levels, they’re all professionals, they still have the stigma of the bias attached to them,” said Dr. Sundaram.
Though the Fair Housing Act was signed in 1968, which prohibits discrimination in selling and financing of housing, homeownership rates for Blacks and Latinos haven’t increased. According to U.S. Census, 72% of White Americans own their homes, compared to 47% of Latinos and 42% of African Americans.
Though many people of color say it’s difficult to get the loans they need in order to open businesses and buy homes, there is one organization in Tampa that’s trying to change that by making loans more accessible to people who oftentimes are denied by other lending institutions.”
Aidza Antonio-Thomas is the executive director of Solita’s House, a community development financial institution. Her organization gives financial advice and lends money with low-interest rates, mostly to people of color. “Listen, we all work, we all get up, we’re all productive citizens; and, so, for you to tell me that just because of what I look like, I may have bad credit, or I may be a greater risk to you is ridiculous,” said Antonio-Thomas.
She says her organization lends money using a social lending platform. “The relationship that you and I have will determine whether or not I loan you the money,” she said. Participants are tasked with taking financial literacy courses and working with advisers to save a certain amount of money that’s agreed upon.
Dondrea Grace has rented all her life, but with the help of Solita’s House, she’s close to moving into her very own house. “My goal is to move forward, become a first-time homeowner. I just wanted to do that for myself. I always thought I couldn’t,” said Grace. Her house is currently being built.
Grace said told ABC Action News why homeownership is important to her, “Because, to me, it’s something new for me. It’s like you’re getting a brand-new car. You know, I don’t have everything that I can think of, but I never had a home.
Though Dondrea is fortunate to have community advisers and financial assistance, many other people of color are trying to get mortgages through major lending institutions. Dr. Sundaram says though there is training on implicit bias, it’s difficult to change perspectives and behaviors overnight. “In a way I’m hoping that technology is going to help reduce some of the bias that we’re seeing up until now that we’re seeing in regards to lending practices,” said Dr. Sundaram.
Aidza Antonio-Thomas from Solita's House says, ways to eliminate implicit bias in banking when applying for a loan is knowing exactly what you qualify for and then arming yourself with information to ensure you get the best deal possible.