Maria Zywiciel is president of NAHREP Consulting Services
(NCS), a marketing-consulting company specializing in the
Hispanic segment of the housing industry. Zywiciel has
more than 20 years of financial industry experience. Her
expertise in how cultural nuances factor into buying decisions and consumer behaviors has been critical to successful
strategies for financial service companies reaching diverse
markets. She holds a bachelor’s degree in international
relations and a master’s degree in marketing. Reach her at
Understanding Diverse Markets
Different cultures bring unique issues to the mortgage table
By Maria Zywiciel
Abank or mortgage company looking to increaseitsfootprintin diversemortgage markets should examine all aspects of the process that impacts lending performance. Some critical areas to review include improving
community outreach, hiring diverse loan officers,
creating in-language marketing materials, as well as
developing or locating new lending programs and
products. The area that can take the most time, however, is building relationships with credit policy and
Having a strong credit-policy partnership is one of
the most critical functions. Without clear market data
that explains regional market conditions, banks and
mortgage companies cannot make new policies — or
adjust old ones — to be more reflective of consumer
needs. Also, input from sales can aid in writing clearer
policies, which will lead to consistent implementation
by underwriters once they receive the files.
In a few short years, the country’s demographic
trends — racial, family structure, age, etc. — will shape
the way lenders address emerging markets. According
to a 2010 report from the Joint Center for Housing at
Harvard University, 17 million new households will
form between 2010 and 2025, of which 14 million will
be from diverse communities. A whopping 40 percent
will be Hispanic.
These demographic changes can have subtle and
not-so-subtle impacts on how mortgages are underwritten and how creditworthiness gets determined
Some community-lending solutions, for example, such
as those from Fannie Mae and Freddie Mac, take careful consideration of family structures to improve their
programs. Many diverse cultures live in extended-family households with more than a few members
contributing to the household income.
In fact, 25 percent of Hispanics with mortgages have
multigenerational households that provide extended
incomes. These households include one or more
extra adults living in the home that provide incomes
that equal at least 30 percent of the main borrower’s
income. This highlights the underwriting nuances
needed to serve the Hispanic consumer segment.
Rental income from an attached unit or from someone living in the basement of the home also can be
an important source of income for many borrowers. In
some instances, borrowers can use boarder income to
qualify for a home. Originators must be familiar with
these programs and well-versed in how their company
handles these scenarios.
Millennials also are forcing new ways of thinking
about income calculations, and diverse markets are,
by far, younger than the general market. Nearly six in
10 Hispanics are millennials or younger, for example.
Many are attracted to — or need to — work for service
companies like Uber or Lyft, but then find it difficult to
qualify for loans.
Seasonal work, prevalent among immigrants and
other diverse cultures, also requires innovative income
calculations that take multiple jobs into account. Conventional thought may consider seasonal workers to
be risky borrowers, but they also can be viewed as hard
working and dependable — a testament to their drive
to reach the American dream of homeownership.
The self-employed also are an emerging minority
segment that may need specialized income considerations. There are more than twice as many Hispanic-owned businesses today compared to 13 years ago.
The Hispanic share of all new entrepreneurs more
than doubled from 10 percent in 1996 to 22.1 percent
in 2014. This trend continued in 2015, according to the
Kauffman index of Entrepreneurship, with Hispanics
having the highest rate of new business starts.
Originators need to have a clear understanding of
Credit and downpayment issues
how to handle the income of the self-employed, and
whether or not their company has overlays on top of
what the agencies generally require. Loan originators
who are confident in the rules will be more likely to
pursue business owners as clients, which by default
can bring in more diverse business to the company.
A 2015 report by the Consumer Financial Protection Bureau (CFPB) revealed that 20 percent of all
American adults — about 45 million people — lack
a traditional credit score. In addition, these people
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