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Banks and credit unions that have Black leadership — based on how their executives or board members identify — tend to serve communities that are majority Black. They also make more home loans to Black borrowers, according to data from the Federal Deposit Insurance Corp.
Because these institutions tend to be smaller and community-focused, to obtain a home loan from one of them, you generally need to live within their state, if not within a more specific metro area. There's currently only one Black-led nonbank mortgage lender in the U.S., Legacy Home Loans, which does business in 23 states as well as Washington, D.C.
Getting a mortgage from a lender that serves Black communities doesn't just enable you to become a homeowner. Giving these institutions your business can help support their missions of increasing economic opportunities for underserved populations.
Whether or not you live in an area where working with a Black-led or Black-owned mortgage lender is an option, consider supporting the Black community by working with Black professionals or others who share your values during your home search and while securing your mortgage. For example, you can look for a real estate agent who is a Realtist, which designates an affiliation with the National Association of Real Estate Brokers. NAREB, which has a primarily Black membership, is focused on promoting fair housing and equal rights.
» MORE: Ways to invest in racial justice
If you want to maintain a relationship with your mortgage lender after closing, ask the loan officer whether the lender services their loans. Many financial institutions that provide home loans then sell them to other companies, giving them funds to make more loans. But that also means you may end up making your mortgage payments to a nonbank servicer rather than the lender you started out with.
Black-led and Black-owned mortgage lenders
» MORE: See a list of Black-owned banks and credit unions
Methodology: To come up with this group of lenders, we looked at lists of "minority depository institutions," or MDIs, from the Federal Deposit Insurance Corp. and the National Credit Union Administration. Both of these organizations track financial institutions that are led by or focus on serving people of color, though their qualifications for MDIs differ.
The FDIC considers banks and other financial institutions to be MDIs if at least 51% of shareholders are "minority individuals" or a majority of the institution's directors, as well as the community it serves, identify as non-white.
The NCUA designates credit unions as MDIs if a majority of the credit union's board of directors, members and the community it serves identify as Black, Asian American, Hispanic or Native American. The credit unions provide this information to the NCUA.
Both the FDIC and NCUA lists indicate whether an institution meets their criteria for MDIs on the basis of having Black leadership or serving predominantly Black communities.
We also included Legacy Home Loans, which is currently the only Black-led nonbank mortgage lender in the U.S.