The article below documents the creation of the first social impact bond, a mortgage security backed by home mortgage loans exclusively from minority-owned institutions. Fannie Mae, GE Capital Mortgage Corp., Creative Investment Research, and an institutional investor collaborated to create this mortgage security. The mortgage security involved private investors providing upfront capital to Creative Investment Research for this specific social intervention, which aimed to open the secondary mortgage market to minority-owned institutions, allowing them to offer more mortgage loans to their target customer base. The investment returns were derived from the underlying mortgage loans, which were tied to the positive social outcome. We note that the graphic above, showing the individual mortgage loans in an MBS pool, was one of the first to use geocoding to display social metrics of an investment, in this case, mapping loan location to area income. This was another significant innovati...
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