Washington, D.C. – Today, the Consumer Federation of America (CFA) released a policy proposal illustrating an alternate path for closing the African American homeownership gap. Honoring America’s Promise: How Passing Unused VA Loan Benefits Down to Veteran’s Descendants Could Narrow the African-American Homeownership Gap recommends a framework for transferring the previously unused home loan benefit for any veteran to the veteran’s surviving spouse, child, grandchild, and other direct descendant, without limitation. For purposes of the proposal, transferable VA loan benefits would have accrued to veterans whose service period roughly overlaps with the federal government’s support of racially restrictive housing policies, namely between the passage of the GI Bill in 1944 up through the enactment of the Community Reinvestment Act in 1977.
CFA estimates that, under the proposal, roughly 12,649,337 descendants of African-American veterans would be eligible for VA-financing and, as a result, able to access homeownership without making a down payment. The paper goes on to explain how the proposed transfer would disproportionately benefit descendants of African-American veterans based on the nation’s history of using racially discriminatory policies to prevent those veteran borrowers from accessing the VA home loan benefit and, as a result, accumulate the generational wealth needed to assist their descendants in their efforts to buy a home.
“Historically, racially discriminatory polices supported by the federal government deprived many African-American veterans of the ability to buy homes using their VA home-loan benefit. As a result of those barriers, the current down payment requirement for home financing has especially disadvantaged African-American borrowers due to their lack of transferable generational wealth,” said Mitria Wilson-Spotser, CFA’s Director of Housing Policy and author of the report. “This proposal would rectify that challenge by righting a historical wrong that left so many African-American veterans without the ability to purchase homes and accumulate transferable wealth to leave to their families in the first place.”
The report is available here.
Contact: Mitria Wilson Spotser, 202-387-6121 x1019