Access the full phase 1 report here
What is the Mortgage Access Initiative?
In 2020 and 2021, we as a country bore witness to racial disparities on multiple fronts. From police violence against Black people and the unrest that ensued, to the COVID pandemic’s disproportionate impact on Black and Brown communities, structural racism was front and center. In Chicago, we read the study by WBEZ and City Bureau showing that lenders had originated more mortgages in a single White neighborhood than all Black neighborhoods combined. Together, these events drove policymakers to develop legislative solutions such as the Illinois Community Reinvestment Act and the Chicago Lending Equity Ordinance.
Neighborhood Housing Services of Chicago (NHS) and Woodstock Institute saw an opportunity to have an honest conversation with mortgage lenders about the barriers to homeownership for borrowers of color. Learning from the experiences of past initiatives with similar goals, the decision was made to convene representatives from different kinds of mortgage lenders (banks, credit unions, and mortgage companies) of different sizes (from regional to national) to share their expertise in closed-door meetings – so the Mortgage Access Initiative (MAI) began in the Fall of 2021.
The end goal was to develop industry, policy and regulatory recommendations rooted in the decades of industry experience that MAI members brought to the table, but without the challenges associated with those recommendations being tied to any of the participating institutions. The first step was to map the mortgage lending process from soup to nuts. MAI members helped fill in the gaps and details from the lender side of the process, and housing counselors through interviews with borrowers of color helped fill the gaps from the borrower perspective.
This process map allowed for better questions of everyone involved in the process and identified intersection points with other important stakeholders like appraisers, real estate professionals, and the government sponsored enterprises (GSEs) like Fannie Mae and Freddie Mac. After 18 months of meetings, both in-person and virtual, Phase 1 concluded with three main recommendations:
1. Create an Equitable Mortgage Product
2. Ensure FHA Loans Only Go to Borrowers Ineligible for Conforming Loan Products
3. Address Loan Officer Compensation Structure & Optimize Relationships with Housing Counselors
