The importance of financial education for minority borrowers

Today’s HousingWire Daily features the fourth episode of Honest Conversations, a miniseries on minority homeownership, hosted by HousingWire Digital Media Manager Alcynna Lloyd. In this episode, Lloyd interviews Castleigh Johnson, MyHomePathway’s founder and CEO, about the relationship minorities have with financial education and homeownership.

Here is a small preview of the interview, which has been lightly edited for length and clarity:

Alcynna Lloyd: As someone who has worked at several finance titans like AIG, BMO Financial, Ernst & Young, the Federal Reserve, J.P Morgan, Goldman Sachs, and more, I’m sure you know the finance industry like the back of your hand. During your tenure at some of these companies, what did you learn about the relationship between minority communities, financial education, and banking?

Castleigh Johnson: To be honest, there’s a huge gap between minority and majority communities in terms of their personal financial knowledge. I can actually use my own experiences as a simple example of that. I graduated from Penn State with a bachelor’s in business, but I truly did not understand a lot about my own personal finances. I actually made quite a few mistakes after graduating undergrad and didn’t understand how impactful my credit scores were on my financial life, and what that meant in terms of making better financial decisions. And then again, within my cohort and my network, when asking people about their own personal financial decisions and circumstances it truly shed a light for me, in terms of the gap that’s out there in a lot of communities. So, that created one of those aha moments for me. When I went back to NYU, I began to truly understand a lot more about finance and banking, and how it worked, which led me to the Fed. I worked at the Fed in 2008, during the last financial crisis, and we saw a huge gap in terms of disparate impact from the housing crash, and the fact that a lot of minority communities did not recover from the 2000s in terms of their asset appreciation, and even access. So, there are significant gaps that are still out there between minority and majority consumers, as well as Millennial consumers’ financial knowledge and behaviors.

Honest Conversations is a miniseries that examines the state of minority homeownership and the factors that have contributed to inequality within American housing. Each Wednesday, tune into HousingWire Daily as we aim to provide listeners with a greater perspective on how race, housing, and wealth intersect and what experts are doing to close the gap. Sponsored by Caliber Home Loans and hosted and produced by Alcynna Lloyd.