In 2017, a small business came up with a fully online mortgage tool. The founders called it an intelligent mortgage adviser, and named it Home Lending Pal. It’s meant especially for first-time home buyers. The platform uses artificial intelligence (AI) to help them become home buyers. Its application criteria do not include race, age, gender or sexual orientation, or other traits that could marginalize them. It’s all about the finances, and that’s that.
Based on Home Lending Pal’s business plan and two years’ worth of positive history, the IBM® Hyper Protect Accelerator team began its supportive collaboration with the company. Home Lending Pal integrated IBM® Blockchain and IBM® Cloud.
Buy a Home? Where Do I Even Start?
As the company explains on Twitter: “We built Home Lending Pal for first-time homebuyers who have dreams of being a homeowner but may be intimidated by the process or don’t know where to start.”
Anyone can search for homes on Home Lending Pal, and take a step-by-step journey on the mortgage approval path. Kev, the platform’s AI-powered guide, analyzes the data to match customers with mortgages. The customer gets:
- Guidance on improving credit and applying for available mortgage assistance.
- The ability to select homes (real estate websites are integrated with the platform) and have Kev respond with the chances of a mortgage approval to buy the home. If the odds are low, Kev will walk the customer through credit improvement steps.
- Application of AI to match the customer’s financial profile with the appropriate lenders, mortgage assistance, or both. The customer gets a list and can select a lender to work with.
- An overview of the data lenders will apply in underwriting a mortgage.
- A rundown of hidden fees and closing costs, to allow for real budgeting (which online mortgage calculators do not help people do).
- Assistance in organizing all necessary financial information and preparing the required documents to submit.
- Completion of all financial aspects of the deal online. (Home Lending Pal is a licensed mortgage broker.)
Kev can tell a customer the price range of a home they can afford to buy, the rough timeline, and how they can rearrange their financial habits to succeed.
The Importance of Addressing Bias in Lending
People apply for mortgages solely on the basis of their financial situation with Home Lending Pal. Why does this matter? It’s an example of technology that can potentially remove bias from the application element of mortgage lending.
According to the Urban Institute, applicants from minority groups are much less likely than applicants overall to be approved for loans. The application process, of course is only one element. Racial wealth gaps involving real estate are complicated, having formed over decades.
Home Lending Pal was started by Black and Latino co-founders. At first, they wanted to make mortgages easier for young people and first-timers to approach. The co-founders applied to the accelerator program because they thought it would suit their startup’s focus on a proprietary method to process sensitive data. Before long, they discovered another aspect of “contactless” mortgage lending. Home Lending Pal could isolate credit and financial factors rather than a customer’s appearance or other personal factors when producing decisions.
IBM Blockchain: Key to the Company’s Success
Home Lending Pal’s secret sauce is deriving insights from individual bank and credit accounts, so the Hyper Protect Services that come with the IBM® Cloud is critical to the mission. And so is the famous tech company’s blockchain capabilities. The beauty of blockchain is the way it can hold financial information in a tamper-resistant way. Home Lending Pal is an example of blockchain, put to its best use.
“[M]ore than 800 people have already become homeowners with help from Home Lending Pal,” says IBM in its case study.
“And many more are well on their way to home ownership thanks to the company’s guidance.”
And that’s good news.
Supporting References
Leah Valentine for IBM.com:Making Dreams Come True Home Lending Pal Uses IBM Technology to Help More People Become Homeowners.
Trevor Fraser for Orlando Sentinel Online: Online Mortgage Marketplace Deploys Computer Power to Fight Lending Bias (Aug. 24, 2022).
Photo credit: cottonbro studio, via Pexels.