Modex’s Dale Larson III: Beyond CRA–Five Reasons the Mortgage Industry Should Leverage Data on Population Diversity, Minorities and Underserved Communities

Dale Larson III is founder and CEO of Modex, a technology platform. Founded in 2015, Modex enables mortgage companies and loan officers to make smart employment decisions by providing key mortgage, real estate and consumer insights on every loan officer, branch, and company nationwide. Its new offering, Modex Profiles, uses the power of Modex data to connect hiring managers and loan officers looking for employment opportunities. For more information, visit Modex.

The mortgage industry has undergone significant transformations over time, with regulatory frameworks like the Community Reinvestment Act (CRA) playing a pivotal role in shaping lending practices. While compliance with CRA regulations continues to be a major priority, financial institutions must recognize the importance of diversity, minority inclusion and support for underserved communities as a critical component of their overarching strategy.

In this article, we’ll explore five reasons why mortgage industry leaders must make meaningful investments in DEI to future-proof their business, and how leveraging technology and highly relevant data can help drive those efforts forward.

Reflecting the community

One of the primary reasons for embracing diversity and minority inclusion is to reflect the communities these institutions serve. A diverse workforce, from the executive suite to loan officers and customer service representatives, helps lenders connect with a wide array of customers. It fosters trust and understanding, leading to more meaningful interactions and better financial products tailored to individual needs.

Expanding market opportunities

Minority and underserved communities represent significant market opportunities that should not be overlooked. By proactively reaching out to these communities, mortgage institutions can tap into a broader customer base, increasing their market share and profitability.

Mitigating risk

Diversity and inclusion in decision-making processes can help identify blind spots and biases that may lead to risk exposure. A diverse team can offer diverse perspectives, reducing the likelihood of making hasty or uninformed decisions that could harm the institution’s reputation or financial stability.

Enhancing innovation

Inclusion of diverse voices sparks creativity, and diversity has been shown to correlate with greater innovation and better financial results. For example, a study from BCG showed that companies with above-average diversity produced a greater proportion of revenue from innovation (45% of total) than from companies with below average diversity (26%). Mortgage institutions that prioritize DEI are more likely to develop new products, services and approaches that meet the evolving needs of their customers. This innovation, in turn, strengthens their competitive position in the market.

Strengthening reputation

Customers and employees increasingly value socially responsible businesses. By demonstrating a genuine commitment to diversity, equity, and inclusion, mortgage institutions can enhance their reputation, brand loyalty, employee retention, and employee satisfaction. Positive public perception can even lead to increased business opportunities and partnerships.

A new way to translate CRA and DEI goals into action

To fully embrace the principles of diversity and inclusion, mortgage institutions need the right tools and technology to streamline their CRA compliance efforts while going beyond the basics. Do you have a framework for managing CRA requirements and meeting your DEI goals? A compliance solution helps you deliver on diversity and inclusion commitments not only to regulators but also to customers, employees, and stakeholders.

For instance, Modex Compliance, a new offering from Modex, provides robust data to help meet CRA requirements. With filters for census diversity, census income and census CRA criteria, users can capture the racial and ethnic composition of neighborhoods a loan officer primarily serves as well as census tract income and census CRA criteria to examine data points such as poverty, unemployment, distress and location remoteness.

These filtering capabilities extend across loan officers, branches and entire companies, with detailed pages that offer insights into population diversity, income levels, and other relevant metrics. Leaders in the banking, depository and credit union sectors are encouraged to reach out to Modex for further feature and pricing information.

In the ever-evolving mortgage industry, it is clear that the importance of DEI and support for underserved communities goes beyond mere compliance with the CRA. Mortgage institutions that embrace DEI as a strategic imperative will find themselves better positioned to reflect their communities, tap into new markets, mitigate risks, foster innovation, and enhance their reputation.

(Views expressed in this article do not necessarily reflect policies of the Mortgage Bankers Association, nor do they connote an MBA endorsement of a specific company, product or service. MBA NewsLink welcomes your submissions. Inquiries can be sent to Editor Michael Tucker or Editorial Manager Anneliese Mahoney.)