CHAIRMAN AND PRESIDENT
National Association of Hispanic
Real Estate Professionals
as seen elsewhere, federal housing administration (fha) loans are gain-
ing popularity in brooklyn, with purchase volume doubling between June 2008
and this past June, according to a MortgageDataWeb.com survey of select lenders.
But their usefulness is a bit different in New York’s most-populous borough, where even
a 16-percent home-price drop between the second quarters of 2008 and 2009 leaves
the median home price 2.5-times greater than the national average.
One factor is the housing mix: According to a market summary by Prudential Douglas
Elliman and Miller Samuel Inc., co-ops — currently ineligible for FHA financing — and
condos comprised 49.9 percent of Brooklyn sales in the second quarter; condos alone
were 26 percent of overall sales. The FHA requires at least half of a condo develop-
ment’s units to be sold before it will offer financing. Comparatively, Fannie Mae won’t
lend on new or converted condos unless at least 70 percent of the development’s units
are presold or under contract — up from 51 percent previously.
FHA’s potential 3.5-percent downpayment also is attractive to first-time buyers in Brook-
lyn, where incomes still are below the U.S. average.
With FHA gaining ground, sales of all property types increased 20. 4 percent from this past
first quarter to second quarter, dwarfing the average winter-to-spring gain of 1.7 percent
What the Locals Say
“You have the lower-end market — $800,000 and less — that is still moving. Then
you have the high-end market, which is only selling to people who are well-qualified.
The market has pushed out people who want to buy a $2 million house with [only] 20
▲ Borough/Kings County population: 2.56 million
• Population in 2000: 2.47 million
• Rank among counties (U.S.): 7th-largest
• City population: 8. 36 million
• City rank (U.S.): 1st
• Metropolitan-area population: 19 million
• Metropolitan-area rank: 1st
▲ Average commute: 44.2 minutes
• Average commute in 2000: 43.2 minutes
• U.S: 25. 3 minutes
▲ Median household income: $41,406
• Median household income in 2000: $32,135
• U.S.: $50,740
▲ Median age: 35.1 years
• Median age in 2000: 33.1 years
• U.S.: 36. 7 years
▼ Inflation (Consumer Price Index, MSA, July): -1.1
• Inflation in July 2008: 5.1 percent
• U.S. (July): -1.9 percent
▲ Unemployment (June): 9. 9 percent
• Unemployment in June 2008: 5. 5 percent
• U.S. (June): 9. 5 percent
• Licensing: Individuals and companies applying to own
and operate broker operations must submit materials
through the Nationwide Mortgage Licensing System’s
online application process and pay required fees. Applicants must submit a personal credit report; surety bond
or deposit agreement; personal financial statements; a
business plan; and a fair-lending-compliance plan.
• Number of broker companies:
• Borough: 140
• State: 1,481
• State association: New York Association of Mortgage
▼ Median home price (condos, co-ops & one- to
three-family properties): $441,090
• Median price in second quarter 2008: $525,000
• U.S. (single-family): $174,100
▼ Total home sales: 1,428
• Total home sales in second quarter 2008: 2,031
▲ Average days on market: 146
• Days on market in second quarter 2008: 136
▲ Inventory: 6,330 properties
• Inventory in second quarter 2008: 6,037 properties
▲ Median monthly housing costs: $2,365
• Median monthly housing costs in 2000: $1,605
• U.S.: $1,464
▲ Housing units: 959,465
• Housing units in 2000: 930,866
▲ Foreclosure volume (Brooklyn/Kings County, July):
• Volume in July 2008: 622
• County rank in state by foreclosure percentage:
12th (out of 62)
▼ FHA average purchase-loan size (June): $470,400*
• Average in June 2008: $505,400
▲ FHA average refinance loan size (June): $434,164*
• Average in June 2008: $432,268
▼ Conforming-loan limit (one-unit): $625,500
• Limit in 2008: $729,750
• U.S.: $417,000
• Demographics: 43 percent white, 35 percent black,
9 percent Asian, 13 percent other; 20 percent identify
as Hispanic or Latino
• Top private employers: Rainbow USA Inc., National Grid,
New York Health Care Inc., MJG Nursing Home Co. Inc.
Having recently celebrated its 10th anniversary, the
15,000-member National Association of Hispanic Real
Estate Professionals (NAHREP) holds its annual marketing conference for all types of real estate pros this month
in Las Vegas. NAHREP Chairman and President Tino Diaz
discusses the Hispanic community and its importance to
mortgage brokers and the country’s financial future.
How has NAHREP reacted to the downturn of the
past two years? Our mission remains ever the same
and just as necessary. The need to make sure that we
sustainably increase the rate of Hispanic homeownership is critical not just to Hispanics but also to all Americans. Many long-time participants in the mortgage
business took for granted that housing people meant
housing them sustainably. Greed gave way to practices
that were transaction-based as opposed to based on
building a community.
According to the Pew Hispanic Center, Hispanics will account for most of the U.S. population
growth between now and 2050, when they will
comprise 29 percent of the populace. What does
this mean for the mortgage industry? Today’s Hispanic population is exactly the same kind of population
we had right after World War II — a young population. The
baby boomers are the ones who created U.S. expansion
and growth in wealth. This is their replacement. It makes
good business sense to help Hispanics and other minority groups make their homes safely and successfully.
Wealth creation happens through homeownership.
According to some surveys, minority borrowers,
including Hispanics, were targeted for subprime
lending. What’s NAHREP’s take on this? Is there targeting? Yes. But I’ll tell you, there are factors in there, such
as Hispanic borrowers not fitting the U.S. home-lending
tradition. For example, many Hispanics don’t establish
credit because they believe in buying things with cash.
How can the lending industry adjust to that?
Alternative credit scores are absolutely critical. We have eliminated the traditional underwriter’s authority to make
lending decisions based on character with this thing
called the credit score. Some of the alternative credit
scores being developed use excellent approaches. Assessing borrowers accurately is not an easy problem,
but it’s one that can be solved with different and better tools. So we are very much behind alternative credit
scores being brought into the system.
What challenges face the introduction of new
lending tools and methods? A delicate balance
needs to be struck. We want to protect consumers at the
same time we make sure there’s a healthy amount of free-market capitalist creativity going on. Now is a time when
we need experimentation — safe experimentation —
to help people get into homes sustainably.
How can brokers balance initiatives to increase
Hispanic homeownership sustainably with increased scrutiny on borrower qualifications? It’s
about implementing a systematic and conscientious effort to educate borrowers; painting a clear picture of how
homeownership is within their grasp; educating them
on their options; and helping them build a creditworthy
profile and a budget that incorporates all the aspects of
homeownership in their lifestyle.
Darrick Meneken is an associate editor at Scotsman Guide. Reach
him at (800) 297-6061 or email@example.com.