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.”
