Center for NYC Neighborhoods

The Center’s partners on Underwriting for Good are mortgage experts Mountain View Advisors and management consultant and technology firm Decision Science Analytics.

THE CHALLENGE 

When it comes to traditional mortgage lending, families of color and people with low and moderate incomes historically have been shut out, improperly denied and overcharged. In large part that’s because automated underwriting systems — the algorithmically-based platforms that help determine who can receive a loan and at what rate — are built for people who “fit the profile.” Studies suggest that nearly all of these systems deliver racially discriminatory outcomes.  

The Center's CDFI and other mission-driven lenders have created alternative systems to better serve people of color. But they cannot operate at the scale of conventional lending. Underwriting for Good would automate alternative systems to make credit flow more equitably with the goal of closing the racial wealth gap and increasing homeownership rates among people of color and people with modest means.  

SOLUTION: UNDERWRITING FOR GOOD 

The Underwriting for Good system expands access to credit by looking beyond traditional metrics of creditworthiness – such as credit scores – to increase access to homeownership for Black and Brown families in New York State and, potentially, other parts of the United States. 
 
Underwriting for Good uses alternative credit data, including rental payments, utility payments, and subscription services that show sustained payments and cash flow, to support borrowers with lower credit scores or who lack credit history. 

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“Without the Breakthrough Challenge, the idea that we need to look more holistically at people when it comes to mortgage lending would still be a great idea. But without the seed capital to explore this innovation, it would not be on its way to being launched and implemented.”  
― Natasha Pallan, Center for NYC Neighborhoods

Underwriting for Good also uses automation to provide families faster and more affordable access to home mortgages. This automated digital underwriting system – sophisticated software that analyzes whether a borrower is qualified for a loan – automates a process that is often subject to lengthy manual review and approval, which can introduce bias.

IMPACT

Once implemented, Underwriting for Good will improve access to mortgages for Black and Brown borrowers in New York State. Its impact will expand and diversify the number of qualified borrowers and increase refinancing opportunities for existing homeowners. 

Looking further ahead, Underwriting for Good’s innovators seek national adoption of the system. Going to scale will create a new supply of mortgage loans in which secondary market investors can invest, freeing up additional liquidity to lending institutions – and potentially enabling credit access to millions of borrowers of color who will gain the opportunity to build wealth through homeownership.