Promontory MortgagePath announced an initiative today to support minority-owned financial institutions’ efforts to expand access to credit and homeownership in underserved communities.
Through the initiative, Promontory MortgagePath will partner with minority-owned depository institutions (MDIs) such as banks and credit unions, including community development financial institutions (CDFIs), to offer exclusive pricing, resources and joint marketing opportunities, the company said in an email to MPA.
“The challenges facing community banks in low- to moderate-income areas will not be fixed immediately,” Promontory MortgagePath founder and CEO Gene Ludwig said. “But we must take action now to ensure that these vital institutions are supported, because when these institutions thrive, the positive impact on their communities is profound.”
The initiative is meant to accelerate the ability of minority-owned banks to help their communities, the company said. There are more than 1,100 certified CDFIs in the US, managing about $222 billion in assets. Of the more than 5,400 federally insured financial institutions in the country, 149 are MDIs.
“These institutions create jobs, increase access to affordable housing and expand financial opportunities for underserved communities,” Promontory MortgagePath said.
A March study by the Urban Institute found that Black-owned banks generally lent in greater shares to low- and moderate-income communities. During the housing crisis, these banks increased their mortgage lending to Black borrowers while other financial institutions backed off. However, the same study found that Black-owned banks are disproportionately affected by financial crises.
Promontory MortgagePath said that without access to cost-effective mortgage fulfillment technology, MDIs can be at a disadvantage relative to other financial institution. That also limits the wealth-building opportunities for the communities MDIs serve. A recent Federal Reserve study found that while homeowners possess a median net worth of $255,000, the median net worth for renters is only $6,300.
As part of its new initiative, Promontory MortgagePath will work with the Community Development Bankers Association (CDBA) to identify strategic partners to participate. MDIs and CDFIs that join the initiative will have access to the company’s technology, US-based mortgage fulfillment services and joint marketing program at a steep discount.
“MDIs and CDFIs play a vital role in expanding access to credit and building wealth in the communities they serve,” said Paul C. Katz, managing director and head of bank relations at Promontory MortgagePath. “Whether they are seeking to establish or grow their mortgage operations, Promontory MortgagePath is committed to partnering with these institutions to provide additional pathways to homeownership, and we highly encourage them to join the initiative.”