Algorithms for All: Has Digitalization in the Mortgage Market Expanded Access to Homeownership?

Digitalization is transforming the mortgage market at every stage of the value chain. In this paper, we examine the potential for the mortgage industry to leverage digitalization to overcome historical and systemic barriers to homeownership for members of Black, Brown, and lower-income communities. We begin by proposing societal, ethical, legal, and practical criteria that should be considered in the development and implementation of a digitalization strategy. Based on this framework, we discuss four types of digitalization that are transforming the mortgage market, including digitalized banking and fintech, digital marketing, the inclusion of non-traditional “big data” in credit scoring algorithms, and the use of artificial intelligence and machine learning in automated property valuation and underwriting models. We conclude that although current digitalized tools may reflect the same biases that have existed historically in the mortgage market, opportunities exist for proactive, responsible digital transformation to remove systemic barriers to mortgage credit access.

This paper was presented as part of “Panel 3: How Is Digitalization Transforming How People Find and Finance Housing?” at the symposium Bringing Digitalization Home: How Can Technology Address Housing Challenges?, hosted by the Harvard Joint Center for Housing Studies in March 2022.