Black and Latino Americans hoping to buy a home in 2021 still face systemic discrimination in everything from loan approval to higher interest rates. The same is true for LGBTQ borrowers and women, who pay higher interest rates than men in 49 out of 50 states, according to HousingWire, which drew on data from the Home Mortgage Disclosure Act.
Now an artificial intelligence-powered software application, developed by a Black and Latino-owned company, is showing promise for changing this reality to make the home buying process more equitable for all.
Home Lending Pal (HLP), an app that was built using IBM’s Cloud Hyper Protect Services, Watson and IBM Blockchain, digitizes the mortgage research and application process so that banks and mortgage lenders don’t see a prospective buyer’s personal identifiable information, such as their name, race, gender, sexual orientation or age. Instead, they only see their financial data, which includes their income, debt and credit payment history.
The AI app collects these data points and makes recommendations to home buyers on how to improve their rate and the steps they need to take to score the best mortgage loan available. The app is free for potential borrowers.
“We tell you the likelihood of being approved for a loan,” Frank Pollock, chief marketing officer for Home Lending Pal, explained to BET.com. Pollock said the platform prepares buyers for the underwriting process. But first, they are educated about their credit, the rates they qualify for, and are even shown how to pay down outstanding debt to improve their financial picture.
Ultimately, Home Lending Pal, which is dual headquartered in Orlando, Florida and Durham, N.C., aims to make the lending process more transparent for everyone.
This past May, the app’s initial public beta had over 17,000 new users and helped over 800 people qualify to buy homes, according to a company news release. As a mission, HLP aims to help millennials and people within communities of color to gain access to true and reliable information about home ownership.
The idea is to create an online marketplace of available lending options while preventing bias from seeping into the home buying process. Pollock says he hopes to land as customers a group called The Mortgage Collaborative, an industry association of 260 lenders that aligns with HLP’s mission of mortgage equality by not economically penalizing disadvantaged groups with higher costs. These lenders are all striving for parity, starting with educating people as to their total financial picture and how credit impacts how much they’ll pay for a mortgage loan.
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Home Lending Pal CEO Bryan Young and COO Steven Better, both co-founders of the app, say they are happy with the results so far and know this is something that will benefit all consumers – particularly those who have struggled with finding a home loan or the best path forward.
“We are doing something that has never been done before—making something as complex as buying a home like an online shopping experience and providing an automated way for people who are otherwise discriminated against or marginalized, the ability to secure homes,” said Young.
Jamison Sanders and his wife, Vonsia, bought a home in North Carolina, fully equipped with the knowledge of what they could qualify for and the best areas to purchase, after first trying out the HLP app during its beta testing period. On their own, Sanders told BET.com, they did their research and read articles about the disparities in how Black buyers were treated compared to whites.
“African-Americans owned less homes than other people,” Sanders said. And although Sanders said he and Vonsia didn’t personally experience discrimination while going through the home buying process, the app “helped give us that snapshot of what we needed to look at in the area.”
Dawn Onley is a freelance writer based in the Washington, D.C. metropolitan area.
Clarification: An earlier version of the story said that The Mortgage Collaborative were signed on as customers of Home Lending Pal. In actuality, officials with the company are seeking to sign them on.