The lack of origination in underserved communities is a missed opportunity for lenders. Homeownership is still affordable for far more people than have been given the opportunity to achieve it. A 2017 data set compiled by Freddie Mac, ”Future Borrowers: Challenges and Opportunities” demonstrates that there were over 36 million people across the country who were credit-ready and have not yet purchased a home. Another study released by the Urban Institute in 2016 showed that conservatively, over 5.2 million qualified people did not access credit from 2009-2014. Little has changed in the lending and the business model in the past 5 years. We extrapolate that number to estimate that over 10 million mortgage-ready homebuyers are going underserved in 2019. By successfully lending in underserved communities, lenders stand to conservatively increase their loan volume by at least $1.5 Trillion.
The Citi GPS Report identifies the underlying causes of the racial and economic gaps exacerbated by the COVID-19 pandemic and discusses the value of closing gaps. Report authors prognosticate that if racial inequity gaps were closed today, the equivalent add to the U.S. economy over the next five years could be $5 trillion of additional GDP or an average add of 0.35 percentage points to U.S. GDP growth per year and 0.09 percentage points to global GDP growth per year.
The Company’s competitors include other firms that focus on investing in mortgages, real estate, and in early-stage companies, particularly those that invest in underrepresented people. It may also compete with financial institutions, large publicly traded companies, and other venture capital firms in providing financing to businesses that the Company will attempt to. Many of the Company’s competitors have greater resources than those available to the Company.