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New AI Mortgage App Conceals Race in Loan Applications to Make Homebuying Process Equitable

Finurah will be bringing you a series of articles discussing the difficult choices associated with purchasing a home. Homeownership is one of the main ways to build generational wealth and to help close the racial wealth gap. But it takes more than a mortgage to buy a home, and Finurah will help you prepare for future homeownership.

Purchasing a home is no easy feat for most Americans. There’s saving for a down payment, maintaining a good credit score and then finding the right home for your family. Add another layer of difficulty: discrimination throughout the real estate industry, and it gets even more difficult for Black Americans. Yet, a software company has developed an artificial intelligence app that claims to streamline the homebuying process for all Americans.

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Home Lending Pal, a Black and Latino-owned company, is a digital platform focused on mortgage research. Using artificial intelligence, Home Lending Pal has developed its flagship product: the Intelligent Mortgage Advisor. Its purpose is two-fold. First, it connects potential homebuyers with affordable mortgage lenders and provides customized insight into credit, qualifying interest rates, and how to pay down debt to improve homeowners’ preapproval rates.

The application conceals a prospective homebuyer’s personal information such as race, gender, name, sexual orientation and age from mortgage lenders and banks. The only information that financial institutions can see is income, debt and credit history. The data provides lenders with data insight that makes the home buying process much more equitable.

“The goal is to leverage AI and blockchain that allow the lender to see financial data but hides person information like race and gender,” Brian Young, who co-founded Home Lending Pal with Steve Better, told Charlotte Business Journal. “By leveraging that technology, we can better address the ability for millennials and minorities to become homeowners.”

The process is simple and fast.

“The whole process takes about 15 minutes and is very interactive by pushing you to start adding homes you’re actually interested in and running calculations to tell you what the entirety of your homeownership might look like,” Young told Charlotte Business Journal. “Then we decide if you’re ready to move forward.

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Home Lending Pal co-founders Steve Better (L) and Brian Young

Can AI Curtail Discrimination in the Homebuying Process?

Despite federal laws prohibiting discriminatory practices in the homebuying process, it’s no secret that inequity is prevalent in the real estate industry. The Fair Housing Act protects people from discrimination when they are renting or entering the homebuying process. The Equal Credit Opportunity Act prohibits creditors from discriminating on the basis of race, color, religion, sex, marital status and age.

Yet lawsuits are consistently being filed as a result of discriminatory practices. In October, the Fair Housing Center of Central Indiana filed a federal lawsuit against Old National Bank, the largest Indiana-based bank, alleging discriminatory residential lending practices against Black mortgage applicants.

And in 2020, several fair housing advocacy organizations filed suit against Redfin for digital redlining practices.

To combat these practices, the U.S. Justice Department has established the Combat Redlining Initiative, in hopes of making homeownership more accessible to all Americans.

Home Lending Pal’s software application is onboard to support the work of ending discrimination in the homebuying process. Since it launched its beta program in May, over 17,000 people have used the program, with more than 800 using the program to qualify for home mortgages.

“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,” Young told BET.com.

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