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Underwriting for Good: Resolved to Innovate

Five Ways this Winning Team is Staying Motivated

By
Center for NYC Neighborhoods

As we’ve all heard thousands of times by now, 2020 was unprecedented and full of new, daunting challenges. For us at the Center for NYC Neighborhoods, it also brought an incredible opportunity to bring our innovation, Underwriting for Good, to life with the Housing Affordability Breakthrough Challenge. We knew our idea was important, but the investment of Enterprise Community Partners and Wells Fargo meant we could finally start to make it real. But taking an idea from thought to reality requires a lot more than just coming up with something new: it means bringing perseverance and thoughtfulness to bear on an innovation.  

So, what does it look like to actually make an innovation real now that we have the opportunity to do so?  

Underwriting for Good aims to rewrite who gets to be a homeowner in the United States by dramatically increasing the amount of credit flowing to families of color with modest means. By harnessing the power of financial technology (fintech), this new alternative underwriting system (AUS) will affirmatively address racial inequity and reduce the racial wealth gap through at-scale, non-discriminatory lending. 

The Underwriting for Good team embarked on this journey in fall 2020, and our cross-departmental team has continued to challenge each other to learn together and to stay focused. The Breakthrough Challenge invited us to share how we resolve to uphold that path. Aside from sharing banana bread recipes and tips on the best music to work to, here are five principals that will steer our work in 2021.  

Resolution 1: Equity is the goal. 

At the Center, racial equity is woven throughout our work and our approach. If your mission is to help homeowners, racial equity is nonnegotiable: the legacy of racist housing practices, especially redlining and the predatory lending that emerged during the Great Recession, have made it impossible for many Black and Hispanic families across the United States to have the opportunity to tap into the equity-building benefits of homeownership. Last year’s reckonings with longstanding racial injustice only underscored this, and as an organization, racial equity carries through all of our programming and our internal processes.

The Center has a Racial Equity Working Group made up of staff of all backgrounds representing each department, tasked with leading and organizing the process toward becoming an anti-racist organization with specific goals and deliverables. Organization affinity groups allow staff to bond and collaborate on addressing racial inequality. And, the Center has updated internal performance review mechanisms to directly consider diversity and inclusion. For instance, the Center has transformed the well-known SMART goal-setting process (Specific, Measurable, Attainable, Relevant and Time-Bound) to integrate Inclusivity and Equity – SMARTIE – and has trained all staff on how to use it in performance evaluations. We are constantly asking ourselves and each other to seek equity in our projects and to be sure that our efforts will help close the racial wealth gap – critical to ensuring that Underwriting for Good does not perpetuate the same harms over again.  

Resolution 2: You can’t check in too much.  

Our second resolution is about how we can work better together. We maintain a constant conversation, both on the project and on our process. Innovating requires internal metrics: how do we measure our innovation? Is it enough? Could we go bigger? Have we gone too far from our core goals? When you’re building something new, it’s easy to throw spaghetti at the wall and see what sticks – but that doesn’t always mean it’s the right way forward. We want to always be sure we’re in conversation with each other and doing more good than harm. This is especially true as our innovation requires building new technology and using machine learning, which has largely been deployed to uphold the status quo. We want to harness machine learning to help low- to moderate-income homeowners and to close the racial wealth gap, and this effort requires constant self-reflection, given that fintech tends to be geared more toward those in a higher tax bracket. 

Resolution 3: Pay attention to what’s happening in the industry. 

You can’t innovate if you don’t know what’s out there. There are constantly new innovations and advances happening in the world of mortgage lending and credit assessment, and we innovate better when we engage with our peers. This is increasingly important as people turn more to the internet for resources on credit and lending, and as online interactions more and more are driven by algorithm learning. We want to stay open to what’s happening, both to learn from it and to see how we want to adjust our AUS. Innovation doesn’t mean creating in a vacuum: engaging with the field is critical. 

Resolution 4: What’s in the forecast?

As we look to our peers, we also want to look ahead. What do we predict will happen in the industry based on our knowledge of the field? With the two years we have to create Underwriting for Good, what does innovation look like now, and what will it look like in 2022? Forecasting industry trends will help us stay competitive and creative. The core idea behind Underwriting for Good – that credit can and should be measured via a much larger variety of metrics so that those who are underrepresented in traditional banking will be fully recognized – is not a new one. The industry has long known that greater outreach to underbanked customers is a crucial area of opportunity and a necessity toward closing the racial wealth gap, but has typically left this to credit unions and CDFIs. Our innovation has the opportunity to take an AUS to scale, and predicting how the winds of the industry will blow will make Underwriting for Good stronger. 

Resolution 5: Keep the conversation going. 

One of the greatest perks of being a Breakthrough Challenge winner is the opportunity it’s given us to connect with our peers around the country in a way we might never have before. Engaging with others in the field of affordable housing has sparked so many conversations and created a sense of community as we all work to advance our innovations. It keeps us motivated. Despite all our challenges and different projects, we all have the same people in mind: the residents and homeowners. Homeowners have always been at the core of our work, and seeing how our fellow grantees uplift residents and homeowners through a range of pathways sparks new ideas and conversations for us, too. 

Yes, 2020 presented us with many challenges. But it also brought us this incredible opportunity: to build our dream underwriting system and to do it with the support of a community and partners like Enterprise and Wells Fargo. As our team strives to take our innovation from idea to reality, we are excited to keep learning and growing.  

 

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