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Language barriers affect homeownership, study finds


Many studies over the years have delved into disparate homeownership rates between whites and ethnic minority groups, and new data suggests that a lack of proficiency in English may be one of the reasons why.

In a study released last month by the Urban Institute and Alfred P. Sloan Foundation, researchers found that homeownership rates were 5 percentage points lower on average in neighborhoods with the highest concentrations of limited English proficiency, or LEP.foreign(1)

The study included numbers on the 10 most-frequently spoken languages in the U.S. with respect to LEP. Spanish-language speakers comprise 62 percent of the country’s LEP population, and 42 percent of Spanish speakers — or about 16.3 million individuals — were classified as not speaking English “very well,” the study said. Other languages with large numbers of LEP speakers included Chinese (including Mandarin and Cantonese), Vietnamese, Korean and Tagalog (including Filipino).

The study used zip-code-level data to compare neighborhoods based on their median homeownership rates and levels of LEP residents. Neighborhoods with the lowest percentages of LEP residents had a median homeownership rate of 74 percent in 2016, compared to 69 percent in neighborhoods with the highest percentages of LEP residents — after controlling for other homeownership factors such as income, age and race.

Researchers went on to say they’re not entirely sure how and why LEP negatively impacts homeownership rates, although they suggest increased outreach to LEP communities could help turn more renters into homebuyers. A preferred-language question that will be added to the Uniform Residential Loan Application (URLA) by the Federal Housing Finance Agency (FHFA) “is a move in the right direction,” researchers said.

The preferred-language question is designed to help residential mortgage lenders and regulators gather market data and better serve the potential LEP homeowner population. The government-sponsored enterprises Fannie Mae and Freddie Mac published an updated URLA this past November, although conventional mortgage lenders cannot start using the new application until July 2019 and are not required to do so until February 2020, according to the FHFA.

Neil Pierson is editor of Scotsman Guide’s Commercial Edition. Reach him at neilp@scotsmanguide.com.


 

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