Black entrepreneurs take aim at racial wealth gap by starting mortgage fintech

A fintech startup launching this Labor Day is looking to chip away at the racial wealth and homeownership gaps by helping its customers show lenders that, even if they don’t have the credit score to secure a mortgage, they have the cash flow.

Ashley D. Bell, the founder and CEO of Ready Life, has landed Bernice A. King as chair of the fintech’s advisory council; she is a lawyer, minister, and the youngest child of civil rights leaders Martin Luther King Jr. and Coretta Scott King. Bell currently works at law firm Dentons as senior counsel and was formerly the regional administrator for the U.S. Small Business Administration for Region IV, which encompasses most of the South.

Ready Life and Bell are taking a marketing-forward approach to attract the customers they are looking to help — mainly Black folks and other people of color who feel cheated by the current lending system that prioritizes good credit when considering mortgage eligibility.

“If you have been denied credit for a home, if you feel as though the current system hasn’t been built in a way that can be fair to you and your family, then then we’re an alternative,” Bell said of Ready Life.

To reach that target demographic, Ready Life will sponsor this year’s Denny’s Orange Blossom Classic, a four-day celebration of historically black colleges and universities culminating in a nationally televised football game between Florida A&M and Jackson State on Sept. 4.

“Bernice and I have been leaning into sports and entertainment because these industries make so much money off of the communities that we’re trying to serve,” Bell said of the marketing strategy. He added that the sponsorship would get Ready Life’s message about generational wealth “in front of a crowd that understands very intimately the historical disadvantages African Americans have had.”

Bell is behind two other sports deals that recently made headlines. In December 2020, news broke that a group of Black-owned banks would refinance a major construction loan for the Atlanta Hawks, a team in the National Basketball Association. The National Black Bank Foundation, of which Bell is the general counsel and co-founder, put together the deal. The foundation also put together a $25 million loan from a group of Black banks to Major League Soccer earlier this year.

With their sponsorship of the Labor Day weekend football game this year and follow-up campaigns, Bell said he is hoping Ready Life can turn 100,000 renters into homeowners. He said most customers can expect it will take three to nine months from making their first rent payment through Ready Life to making their first mortgage payment — a timeline that will vary by individual circumstances.

Customers who open an account with Ready Life will get a checking account and associated debit card that they will use to make payments — primarily rent and other housing expenses, but not limited to those. Ready Life is partnering with another fintech to provide that functionality: Figure, a company using blockchain technology for loan origination, equity management, private fund services, banking and payments.

According to a company spokesman, Figure is Ready Life’s program manager and holds the money transfer licenses used for payments, and Primis Bank is Ready Life’s sponsor bank for its debit cards.

Figure’s CEO and chief operating officer, Mike Cagney and June Ou, respectively, are both advisors to Ready Life, and their company is providing the banking and payments infrastructure on which Ready Life will operate. An ensemble of high-profile Black leaders and fintech founders have also gotten behind the project, including Van Jones (the TV host and author) and Yolanda Daniel (vice president of finance at the Federal Reserve Bank of Chicago).

An underwriting technology launched in September by Fannie Mae will also provide technical support for turning Ready Life customers’ rental payments into mortgage underwriting fodder. The system, Desktop Underwriter, enables single-family lenders — with permission from mortgage applicants — to identify on-time rent payments in the applicant’s bank statements to deliver a credit assessment.

“Credit history is a key element in evaluating a borrower’s ability to make a mortgage payment, but fewer than 5% of renters today have their rent payments reported on their credit bureau report, putting many prospective first-time homebuyers at a disadvantage,” a press release from Fannie Mae announcing the new system says.

According to Bell, Ready Life’s approach will offer a strong alternative to the traditional credit-based approach to mortgage lending. He said the company’s private equity partners will provide underwriting for the loans.

“We’re taking into account the personal circumstances of each borrower, not an aggregate average, which is what credit scores are now,” Bell said. “It’s more personalized banking.”

And at the heart of that effort for Bell of delivering more personalized banking is an effort toward racial and economic justice.

“In our country, we have a very acute focus on racial injustice at times, but we leave the economic piece out,” Bell said. “You cannot be in this fight for equality for everyone unless everyone has access to the benefits of being in the greatest country in the world. That begins with the American dream, and everyone needs access to own a home. It shouldn’t just be for the top half, which is what our credit system has created.”