Opinion: ICE’s mortgage monopoly could stifle Hispanic homeownership
November 15, 2022,
Earlier this year, Intercontinental Exchange announced its’ plans to acquire Black Knight, a major provider of software that is used to originate and service mortgages. In the current market — with mortgage rates continuing to rise — the $13 billion bid for merger would create a mortgage technology monolith, which, among other things could raise consumer prices and substantially impair the multi-trillion-dollar housing market.
If approved by the FTC, the merger would dramatically change the face of the mortgage industry — it would give ICE an estimated 63 percent of the software market share in the mortgage servicing market, and 75 percent of the software market share in the mortgage originations market.
If ICE has control over the software that controls the origination and servicing of the mortgage market, the lack of competition would inevitably stifle innovation. Technology and loan product innovations have shown the most promise in closing homeownership gaps in America. A lack of innovation in the housing market will disproportionally impact Hispanics and other underserved Americans.
Access to homeownership has broad implications. Home equity is the primary source of wealth for most Latino-Americans. Because of this, targeted strategies around bridging the homeownership gap are essential to bridging ethnic and racial wealth gaps. Latinos often purchase their first home utilizing low down payment lending products, such as those insured by the Federal Housing Administration (FHA). But even with this help, Latinos are still 81 percent more likely to be denied financing for a conventional loan than their non-Hispanic counterparts.
The merger and the consolidation of the mortgage industry would not only reduce the ability for Latinos to participate in homeownership, the effects could cascade to the overall population. Latinos are predicted to account for 70 percent of homeownership growth over the next 20 years, primarily because it is the youngest demographic in the nation and the primary source of growth in household creation. Due to this, a lending environment must exist that is conducive to expanding access to homeownership, not suppress it. A failure to do so not only would have a devastating impact on the economic well-being of the nation’s minority communities, it could lead to an across-the-board decline to the overall homeownernship rate in America..
This merger puts all of this at risk. The effects that this merger could have on the Hispanic community — as well as other minority homebuyers — should be reason enough for the FTC to stop and assess all the facts before approving any deal. Policymakers need to consider the impact that the acquisition would have on the ability of the mortgage market to address the needs of all homebuyers as well as the lenders providing mortgages.
At the National Association of Hispanic Real Estate Professionals (NAHREP), we believe that homeownership is a symbol of the American Dream and the gateway to the middle class. It is the cornerstone of wealth creation and a stabilizing force for working families. We take our role as trusted advisors and passionate advocates very seriously. Our job is to help more Hispanic families achieve the American Dream in a sustainable way that empowers them for generations to come. And without competition and choice in the market, these potential homeowners could suffer because of ICE’s monopoly in the market, making the dream of homeownership and stability for working families much more difficult to achieve.
Gary Acosta, National Association Of Hispanic Real Estate Professionals
The National Association of Hispanic Real Estate Professionals® (NAHREP®), a nonprofit 501(c)6 trade association, is dedicated to advancing sustainable homeownership for the Hispanic community in America. NAHREP has a network of over 40,000 real estate professionals and 100 local chapters nationwide, hosting several national events per year and publishing multiple industry cornerstone reports annually and multimedia content. Join us in advocating for policies that grow sustainable Latino homeownership, read our 2022 policy priorities here. See the NAHREP Hispanic Homeownership by Congressional District Tool which measures Hispanic homeownership by U.S. congressional district, allowing constituents, advocates, policymakers, and lending and housing professionals to evaluate district performance at a glance.