Community Lending Field Guide
Collective action in community lending: How mortgage professionals can drive lasting change
Working together to create homeownership that lasts
If you’ve ever felt frustrated that, despite your best efforts, many borrowers still face hurdles beyond credit scores and income – like lack of affordable housing, appraisal gaps or neighborhood challenges – you’re not alone.
For mortgage lenders, the primary tool that helps families buy homes and build wealth is the mortgage loan itself. But barriers to homeownership are complicated and can’t be fixed by loan products alone.
So how do we really move the needle in our communities? The answer is collective action.
Why collective action matters more than ever
No single lender, nonprofit group or government agency can solve these complex, interconnected challenges alone. Issues like affordable housing shortages, property condition problems and credit invisibility require coordinated, long-term partnerships.
But by engaging other stakeholder groups, like local governments, community organizations, philanthropists and industry peers, you can pool knowledge, influence and resources to create sustainable solutions.
Adopt the right mindset: Relational, not transactional
Success in collective efforts hinges on building relationships, not just closing loans. Focus on “inreach” rather than outreach. Don’t just extend a hand to the community – dive in to truly understand its challenges and how you can help.
With this mindset, more lending opportunities will naturally follow, but the real win is being part of lasting neighborhood transformation.
A model to learn from: Milwaukee’s Collective Housing Initiative
MGIC works with lenders and other community partners in Milwaukee to address homeownership gaps through the Community Development Alliance (CDA). This alliance includes more than 80 stakeholders from the public, private, nonprofit, philanthropic and academic sectors. The group created the Collective Affordable Housing Plan based on data and community input to pinpoint barriers and measure progress.
While lenders’ involvement in these efforts might not immediately boost loan volume, it builds valuable expertise and positions those organizations as trusted, proactive community leaders.
The real benefits of collective action
Actively participating in collective initiatives affords lenders clear advantages:
- Awareness: Gain deep insights into local housing challenges and the organizations tackling them. You might discover new partnerships and spark product innovations
- Credibility: Earn respect as a committed, knowledgeable player on critical issues like housing supply, fair lending and homebuyer support
- Purpose: Elevate your mission from just originating loans to inspiring real community change. People are drawn to the “why” behind what you do, and purpose drives lasting loyalty and engagement
Barriers that loan applications alone can’t fix
Here are some common challenges collective action aims to address:
- Appraisal gaps: When rehab costs exceed appraised value, subsidies or community reinvestment are needed. But solving this also means improving neighborhood quality of life (like access to schools, green spaces and safety)
- Affordable housing supply: Investor purchases of single-family homes as rentals reduce affordable home purchase inventory. Acquisition funds and nonprofit rehab programs can help preserve homes for owner-occupants
- Credit invisibility: Many borrowers lack traditional credit histories rather than have bad credit. Expanding credit scoring models to include alternative data can open doors
- Homebuyer preparedness and assistance: Increasing capacity for homebuyer education, counseling and down payment assistance (DPA) is essential to turn renters into successful homeowners
Final thoughts: Your role as a collective changemaker
If you want to move beyond isolated transactions and truly impact homeownership in your community, join or help lead collective action efforts. Your expertise, time and investment matter – and when aligned with others, you can tackle barriers no lender can solve alone.
Building trust, sharing knowledge and committing to community-driven solutions will transform not only neighborhoods, but the future of homeownership itself.
Need a partner to help refine your approach?
Our community lending specialists are here to collaborate with you, as an exclusive benefit of working with MGIC, and one more way we are leading the industry. Reach out to your MGIC account representative to get connected.
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