Future-proofing residential lending through responsible innovation and data governance

Responsibility applied to the universe of lending—home, business, automobile, credit card, or through shop merchants—is an important lens for providers (Chakilam & Rani, 2024; Challa, 2022; Chava et al., 2022). And it has increasingly become clear that responsibility is yoked to sustainability for profit as well as social returns. This paper describes the circle of responsibility and sustainability using the case of the largest category of U.S. consumer lending: residential mortgages. We begin with a point of position: young people and people with low, moderate, or even middle incomes are central to the American ideal and thus are vital to its definition of sustainability. They must remain able to achieve a classically defined American Dream: access to home ownership with a mortgage running over time that costs less than rent. This is a core principle of economic democracy in a capitalist society. It is indicated as a prime determinant of a child’s attainment and an intergenerational bridge to the future. It builds personal incentives for care and maintenance, investment, and capital formation.

Recessions, declining incomes, rising costs, inflating prices, and market flimflammery are threats to the ideal. But, unlike deeply substantiated and morally powerful condemnation of intergenerational capital accumulation, sustained housing strategies anchored by historically supported lending strategies encourage the non-rich toward both a present place of happiness and a hoped-for future of sustainability. Economic determination has proved a wise choice, reinforced equally by speed and depth of recovery. Private action is needed to ward off excesses that can threaten collective futures of capital and workforce. The protective institutions have been housing policies, corporate strategy, community interventions, and bits of prescience at odd intersections of public and private life.