CFA, Other National Housing Groups Announce "Build Wealth Through Homeownership" Initiative

WASHINGTON – The Consumer Federation along with other national housing groups have announced a new “Build Wealth Through Homeownership” initiative that’s part of a broader America Saves campaign to help low and moderate income households save and build wealth. The announcement was made at a news conference last month at which the CFA discussed the results of a new study conducted for the association that concludes that homeownership is the main path to wealth for lower income and minority Americans. The research is based on an analysis of Federal Reserve data and outlines the strong correlation between personal financial wealth and homeownership, According to the CFA’s report, well over half of the personal wealth held by lower income and minority homeowning households represents home equity, and their wealth is greater than that of comparable non-homeowning households. According to Federal Reserve data, in 2001 almost all homeowners held at least some home equity. The typical homeowner had accumulated $70,000. For these homeowners, home equity represented 42% of their net wealth. But for lower income and minority households, home equity represented 80% of their net wealth. For moderate income, African American and Hispanic households, home equity represented more than half of their net worth. In comparison, the home equity/net worth wealth ratio was much lower for affluence households. For example, for one-fifth of all households with the highest incomes, only 26% of their net wealth represented home equity. Since most lower income and minority households hold few financial investments, including retirement accounts, that means they depend on homeownership to accumulate personal wealth, said CFA Executive Director Stephen Brobeck. The data suggest increases in the percentage of lower income and minority households that own a home have expanded the opportunity for these individuals and families to build personal wealth. The new “Build Wealth Through Homeownership” initiative was developed by the America Saves Homeownership Advisory Committee. The initiative includes the dissemination of homeownership wealth-building message and services through the networks for the housing groups. The services include motivational workshops and wealth coaching of those who decide to enroll as American Savers with the goal of saving for a home or building equity in their home. In addition, a “Build Wealth Through Homeownership” brochure offers basic advice to those consumers who want to purchase a home or build equity in an existing home. The advice focuses on five themes: prepare yourself for homeownership financially; purchase a home; make home loan payments on time; if you have difficulty making payments, seek help; and be cautious in borrowing home equity. Among some of the groups represented on the America Saves Homeownership Advisory Committee are CFA, Fannie Mae and the Fannie Mae Foundation, Freddie Mac, Mortgage Bankers Association of America, and the National Council of State Housing Agencies. -