Report shows state agencies are increasing home loans to people of color

MassHousing, a quasi-state agency that helps fund home loans for low- and moderate-income borrowers, has quadrupled the share of people of color who access the group's funds over the last decade.

That’s according to a new report from Boston Indicators, the research arm of the Boston Foundation, on homeownership support programs in Massachusetts.

The report finds that while 73% of white families in Greater Boston own a home, roughly 40% of Black and Latino families are owners. But report author Luc Schuster said groups like MassHousing have made strides in reaching people of color.

"There really is evidence that these programs are helping to get moderate-income families, disproportionately Black and Latino families, into homeownership," Schuster said.

The programs involve helping borrowers secure affordable loans and, in some cases, assist with down payments. For instance, Schuster said, a family of four earning $100,000 a year in the city of Boston can potentially buy a first home with aid from MassHousing. But that figure represents a big change from previous years, when families earning significantly less could qualify for loans.

He noted that the fast-rising cost of homes in the area may be offsetting some of the gains in ownership by people of color. For people with lower incomes, buying a home can still be out of reach.

Lending from quasi-state agencies like MassHousing and the Massachusetts Housing Partnership — which issue bonds to raise capital and work with banks that write mortgages — is just a sliver of the overall housing market. But for those who qualify for the loans, it can make the difference between renting and becoming a homeowner.

The Massachusetts Housing Partnership also has made progress in reaching communities of color with homebuying dollars, according to the study. In 2006, half of the group's first-time borrowers were white, compared with 32% in 2022. "We’ve historically had a diverse borrower pool and have steadily been serving a large percentage" of people of color, the group's spokesperson Calandra Clark said in an email.

In 2012, only 11% of MassHousing loans went to Black, Latino and Asian borrowers. That's when officials at the group set a goal that at least half of borrowers should be people of color by 2026, according to Mounzer Aylouche, who leads MassHousing's homeownership programs. As of this August, he said, the organization exceeded that goal.

But Aylouche said the volume of overall lending is shrinking because homes for sale are in short supply and interest rates have jumped to the highest level in years.

Another challenge for low-and-moderate-income borrowers, Aylouche said, is having to compete with investors from around the country that are looking to cash in on the state's housing market.

Schuster said the state needs to do a better job informing homebuyers of help that's available, and more money is needed to expand initiatives like downpayment assistance.

“The racial wealth gap is the consequence of generations of racial discrimination" and redlining by lenders, he said.  "But I think it's important to not go from there to complete pessimism and paralysis. Ultimately, we need to act on many fronts at once.”