December 2016 - Getting Serious About Diversity

TheMReport — News and strategies for the evolving mortgage marketplace.

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30 | TH E M R EP O RT FEATURE H omeownership rates reached a record 50- year low this year. There are many factors contributing to this trend, including residual effects from the financial crisis, a lack of affordable housing, and increased credit restrictions. The groups most impacted by the cur- rent homeownership struggle are minority and low-income com- munities—people who already have a long history of suffering from economic disadvantages and systematic bias in accessing credit. For many minority communities, the dream of buying a home is becoming more and more dif - ficult to imagine. Tech Opens Doors for New Buyers D espite these inherent prob- lems, recent new technologies have begun to level the playing fields for all borrowers, regard- less of socioeconomic status. The digital revolution has impacted all aspects of the mortgage process, from the initial consideration through the application process and continuing into the post-loan borrower experience—something many feel has long been necessary for the industry to succeed. According to David Berenbaum, CEO of the Homeownership Preservation Foundation, tech- nology could be the answer to declining homeownership rates. "Technological innovation is poised to expand home owner - ship at all levels, including minori- ty communities which suffer from large unjustified homeownership disparities," Berenbaum said. No matter where someone lives, online platforms have the potential to connect an individual to personalized information. This, coupled with a mortgage industry that is willing and eager to work with them and earn their busi - ness, sets the stage for helping underserved communities begin to access mortgage services in new ways. Financial Counseling: A Scalable Solution F inancial counseling has long been an incredible tool for anyone interested in borrow- ing. It can provide the educa- tional resources to prepare an inexperienced consumer and help them navigate the many different complexities involved throughout the life of a loan. Counseling has proven to dramatically reduce delinquencies, lower defaults, avert foreclosures, and improve borrower happiness. Yet, borrower utilization of these services remains very low—even when offered freely. This gap is most pronounced post-origina - tion, when the borrower is often unaware of the post-approval counseling service that existed, leaving struggling borrowers to fend for themselves. Fortunately, this has begun to change, as new technologies allow the counseling process to become standardized and accessible to consumers throughout the life of their mortgage. An increasing number of both nonprofit and for-profit counseling services are making their educational resources accessible to everyone through mobile apps, online videos, and other creative platforms. For example, GreenPath Financial Wellness, a national nonprofit with a 50-year history of provid - ing debt counseling to Americans, continues to pioneer a number of tools and resources to help consumers realize their dreams though budgeting, debt manage- ment, and financial wellness practices. "Consumers need, and deserve, high-quality financial services and tools now more than ever—partic- ularly households in underserved communities," said Kristen Holt, President and CEO of GreenPath Financial Wellness. "The new generation of technological solu - tions enabling GreenPath to better meet consumer needs is game- changing and has the potential to transform underserved communi - ties across America." For lenders and counseling groups, it has become easier than ever to take successful programs, and standardize and scale them up to reach more borrowers, anywhere, anytime. Technology has allowed for these programs to reach previously underserved communities at significantly lower costs, helping these borrowers better understand the process and make informed decisions. New Tools in the Origination Process T he actual mortgage application process itself has also been disrupted by new technologies, as automation, instant reporting, and improved consumer experi - ence overtake the traditional legacy systems. The mortgage industry has long been a traditionally paper-intensive business, but over the past few years, there has been a serious push towards automat - ing large chunks of the process. Serving the Underserved New technologies are offering minority communities better access to credit and an easier road to homeownership. By Matthew Cooper

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