How Blend is Fostering a More Equitable and Accessible Consumer Banking Ecosystem

A color photo of a Blonde, blue-eyed woman named Crystal Sumner, the author of the article and Head of Legal at Blend.
Crystal Sumner, Head of Legal at Blend

By Crystal Sumner, Head of Legal at Blend

At Blend, our commitment to removing the barriers to lending and democratizing access to capital for all Americans isn’t just a well-intentioned goal. It’s at the heart of everything we do each day and a value deeply embedded in our DNA.

Nima Ghamsari, Blend’s CEO and co-founder, launched the company in the aftermath of the 2008–2009 financial crisis. Blend’s mission, then and now, is to bring simplicity and transparency to consumer banking. We form partnerships with banks, credit unions, and other lenders to ensure consumers have access to a less stressful, more accessible borrowing experience. We envision a future where Blend powers a healthier financial future for millions of Americans, resulting in a more equitable and accessible consumer banking system.

Last year, Ulysses Smith, Blend’s Head of Diversity, Inclusion, and Belonging, published a piece here announcing our Equitable Ecosystem Initiative. As this long-term call to equity takes place, I’ve been excited to see Blend’s vision of promoting access resounding throughout the financial industry. We’ve seen large banks investing in Minority Depository Institutions (MDIs) and Community Development Financial Institutions (CDFIs), fintechs stepping up to address the lack of diversity in the industry, and proposals that could open access to homeownership.

We’ve embarked on a multi-year plan outlining a number of commitments where Blend is uniquely positioned to help make a difference in reducing inequities in consumer banking. We are actively engaged with efforts to expand Black homeownership, financial stability, and wealth, and to promote economic opportunities for all. I’ll be sharing some of our work below, as well as initiatives and work you can do within your own communities. I’m incredibly proud of the work that we’re doing, and look forward to continuing our efforts.

Partnering with community organizations

Blend is working with organizations representing Black bankers and Black real estate agents, such as the National Association of Real Estate Brokers (NAREB) in support of expanding Black homeownership.

“Access to credit is so important, especially in the Black community,” said NAREB President-elect Lydia Pope, who participated in a conversation on “Building an Equitable Ecosystem: Black Banking, Homeownership, and Generational Wealth” that recently took place privately at Blend.

Late last year Ghamsari had a wide-ranging conversation with Antoine Thompson, NAREB’s executive director, as part of Blend’s Benchmark video series. The two men talked about how to narrow and eliminate the nearly 30% gap between Black and white homeownership in America, and how technology can help promote a more equitable ecosystem. They also dispelled some common myths about financial eligibility for buying a home and discussed how technology can help reduce the cost of homeownership. Blend supports NAREB’s efforts to close that 30% homeownership gap through the organization’s “Two Million New Black Homeowners’ Program” and their regulatory agenda.

NAREB is calling for the following measures:

● Expansion of HUD Section 184 to include Black Americans for 2% interest rate mortgages from FHA

● Call for all 50 states to pass and update fair housing laws

● Call for cities to reform foreclosure prevention laws

● Eliminating zip-code based insurance rates

● Eliminating credit-based auto, life, and property insurance rates

● Call for the Federal Housing Finance Agency (FHFA) and the Federal Housing Administration (FHA) to eliminate Loan Level Price Adjustments (LLPA)

● Increased investment in Black-owned banks, CDFIs, and credit unions

● Creating “Renaissance” neighborhood initiatives

● Increased funding to create more career and business opportunities for Black Americans in commercial and residential real estate and mortgage lending

To learn more about some of the issues NAREB is addressing, check out these additional resources:

Memorandum on Redressing Our Nation’s and the Federal Government’s History of Discriminatory Housing Practices and Policies

2019 SHIBA Report

Treasury to Invest $9 Billion in Minority Communities

How the housing finance industry can help the Black community: NAREB

Breaking down the color barriers to homeownership

Assisting minority institutions

We’ve also partnered with the National Bankers Association, the voice of minority banking since 1927. Through this partnership, Blend is able to sit down with the NBA’s MDI member banks to discuss digital adoption and technology infrastructure. Our goal overall with this partnership is to learn from those working with underrepresented communities on what they need and want from us, and not dictate that the other way around.

“Digital technology is a powerful way for us to provide an array of banking services,” said Kim Saunders, the NBA’s president and CEO.

Saunders also participated in the February 16 conversation on “Building an Equitable Ecosystem: Black Banking, Homeownership, and Generational Wealth” and spoke with Ghamsari and Smith at the “Tech Inclusion 2020: Next Wave of Leadership” summit. The group discussed Blend’s partnership with the NBA, the potential economic impact of Black homeownership on the U.S. economy, and the importance of supporting MDIs. To listen to the conversation, follow the link here.

Promoting regulatory engagement

Blend has taken up the task of helping to enable the development of a sustainable, verified underwriting system based on alternative data sets like cash-flow analysis. By leveraging our deep industry relationships and technology capabilities to reimagine a more equitable home lending ecosystem, we’re focusing on key elements of the homeownership gap such as credit scoring and reaching underbanked populations.

Blend believes the increased use of verified data assessment and underwriting will expand on traditional underwriting criteria like credit reporting to help to close the racial gap in homeownership. As the front-end application platform for mortgage lenders, Blend serves a critical function in the ecosystem of verified, consumer-permissioned data sources like bank account information, payroll data, and more that can enable expanded alternative data underwriting. We support policy changes that would lead to regulatory acceptance of alternative, verified data underwriting in the mortgage industry.

We supported a bipartisan bill introduced in the Senate last year, the American Dream Down Payment Act of 2020, which would allow for the creation of savings accounts at the state level similar to the 529 college savings plan, but with the goal of saving for the down payment to purchase a home. Contributions up to $12,000 per year could be put into these qualified accounts and the savings could grow tax-free as long the funds are used for a down payment. The bill was reintroduced in Congress in late February.

“The introduction of the American Dream Down Payment Act offers Black American families and individuals the opportunity to build legacy wealth through homeownership,” said Pope, NAREB’s President-elect, in a release.

“The ability to accumulate tax-free savings funds breaks down/eliminates one of the most prominent barriers to achieving homeownership, the down payment. This Act serves as a tangible springboard to increase Black homeownership and real wealth building prospects which the National Association of Real Estate Brokers (NAREB) includes in the meaning of its time-honored slogan, Democracy in Housing.”

Encouraging signs ahead

Blend is encouraged by President Joe Biden’s recent pledge to close the racial wealth gap in America. Shortly after taking office the president signed four executive orders, including one that combats discriminatory housing practices. We’re also energized by our participation in the World Economic Forum’s Global Innovators Community, a group of promising start-ups and financial institutions that are at the forefront of technological change and business innovation. The World Economic Forum provides the Global Innovators Community with a platform to engage with public- and private-sector leaders, collaborating to contribute new solutions to overcome current crises and build future resiliency.

Blend also joined the Fintech Equality Coalition to work together with stakeholders across the fintech sector to enhance access to financial services.

Finally, we’re excited by national trends showing that a new generation of Americans are becoming increasingly engaged in the homeownership journey.

“The Gen Z kids are on it, they want to buy and are anxious to make a difference in their communities,” said Marcia Griffin, founder and CEO of HomeFree-USA. Griffin also joined Blend’s recent discussion on “Building an Equitable Ecosystem: Black Banking, Homeownership, and Generational Wealth.” Blend works with HomeFree-USA’s Center for Financial Advancement to focus on building the next generation of leaders in financial services.

Blend partners with more than 285 lenders in diverse communities throughout the United States. We will continue to work closely with our partners to move the financial services industry ahead with the goal of achieving an equitable and accessible banking system for all.

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Follow along Blend’s journey to building an equitable ecosystem with our upcoming next piece from Blend’s Head of Product, Erik Wrobel, who will be sharing his thoughts on building an equitable product.

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