Let’s face it, times have changed, and the long-term effects have yet to be determined. The Covid-19 pandemic has brought with it a new set of realities for the business world, and in the real estate industry, things are no different.
With the national unemployment rate hitting 14.7% percent last month — the highest level since the Great Depression — mortgage lenders are enacting stricter guidelines to determine what a qualified buyer or refinance candidate looks like. Lenders have increased minimum credit scores, required higher down payments and proof of employment status on closing day.
Phillip Harris, owner of BlackHawk Mortgage, says repayment of loans is a big consideration right now in the mortgage industry.
“If people are unemployed, they cannot make their mortgage payment,” he said. “If you are barebone, [living] check to check, you won’t be able to obtain a mortgage at this time.”
Why it matters: Homeownership is a major factor in building generational wealth. Even before the pandemic, data from the State of Housing in Black America report showed declining rates for Black homeownership. The U.S. Census Bureau reported that 44% of Black families owned homes in the first quarter of the year compared to 73.7% of white households, likely widening the wealth gap.
Shifting with the times
As an African-American business owner in the mortgage industry, 30-year-old Harris takes special pride in helping members of his community acquire wealth through homeownership.
Following six years as a combat civil engineer in the U.S. Air Force, Harris founded BlackHawk Mortgage in 2017 and opened the door to homeownership for many who were otherwise denied the opportunity. Harris’ longtime friend and fellow military veteran, JoColby Harrell, 37, joined the team last year bringing 11 years of banking experience from then-BB&T Bank.
Though 90% of their business comes through word-of-mouth and referrals, tightened restrictions have reduced their pool of qualified buyers. Looking for new ways to ride out the economic turbulence, the duo shifted to a consultative approach to help clients determine if purchasing or refinancing a home was an option.
“Everyone wants to own a home and that’s what we’re here for, but we don’t want to put people in a place where they are a risk to themselves,” Harris said.
To ensure they develop a client base considered an asset for lending partners, Harris and Harrell use their Four C’s of Lending — credit, capacity, capital and collateral — to help prospective clients determine their preparedness for purchasing or refinancing properties.
This sense of community responsibility led the business partners to create the “Bars and Real Estate” YouTube series. The video clips feature Harrell and Harris relating rap lyrics to real estate and finances. With music’s cultural impact, Bars and Real Estate seeks to make real estate discussions more relatable for a younger audience.
Harrell sparked the idea from his daily conversations with Harris about wealth management in the Black community. The Winston-Salem State University graduates grew up on hip-hop and wanted to use Jay-Z’s career and personal growth as inspiration for others.
“You don’t see too many young, African-American men in the mortgage space,” said Harrell, who serves as a senior loan officer with BlackHawk Mortgage. “We wanted to put some flavor to the information and present in a way that [would be] entertaining to someone who looked like us and was in our age group.”
“We have other ways to generate income for ourselves, so [the video series] was never a tool to gain more clients. We wanted to share information with the general public and hoped someone could relate to it, gain knowledge, and have a conversation about what they have learned,” Harris said.
Most importantly, they want people to set a goal and stick to it so they’re adequately prepared to make their housing decisions when the time is right.