Mortgage banker Jorge Montoya frequently finds that when he has a meeting scheduled with a Hispanic borrower, the entire family shows up at his Reno, Nev. office.
Parents, brothers, sisters, uncles and aunts gather around his desk while he explains the loan terms, often entirely in Spanish.
“I always have to have extra chairs in my office because if one person is buying a home, mom, dad and uncle are coming over to celebrate with them,” Montoya said.
“That is one of the things that many people who do work with the Hispanic clientele will notice. It is not just one person making a decision. Many times it is the whole family.”
Hispanic borrowers, studies suggest, will be the fastest-growing home buying ethnic group over the next few decades. An Urban Institute study found earlier this year, however, that Hispanics have higher loan denial rates than white borrowers and often struggle to get mortgages and buy homes.
Several studies have drawn attention to a gap in the potential pool of Hispanic buyers and the actual numbers able to get loans and buy houses.
The Demand Institute, for example, estimates that nearly 4 million Hispanics would like to purchase a home, but only 1.5 million are financially able to do so, a gap of 2.5 million potential buyers.
“The reason why we are pointing out the gap is to highlight that there is an opportunity for businesses to understand the needs and preferences of Hispanic households, because they are going to be such an important driver of the housing market going forward, and their needs are distinct in some ways,” said Louise Keely, president of the Demand Institute.
“There is an opportunity there, we think, to better address their needs, even if it means going outside of the typical business models, including home financing.”
Recruiting Hispanic originators
The three most commonly cited barriers to Hispanic homeownership are difficulty making down payments, low incomes and poor credit scores than whites. Hispanics also sometimes believe they can’t qualify for a loan.
Language barriers and other cultural difference also hold some Hispanic borrowers back, says Gary Acosta, chief executive officer of the National Association of Hispanic Real Estate Professionals (NAHREP). Because of their often strong family ties, for example, Hispanics are more likely to get a family member to co-sign with them on loans, a practice that many lenders frown upon.
Acosta said there are too few Hispanic originators who understand these nuances. NAHREP recently agreed to partner with the Mortgage Bankers Association (MBA) to promote MBA’s mortgage industry training programs in colleges with a high percentage of Hispanic students.
“We need more Hispanics in the mortgage space,” Acosta said. “People need access to low down payment mortgages. We need to continue to build supply so that there are affordable housing opportunities for homebuyers and so forth. We also need a professional infrastructure that can engage these very fast growing diverse communities, specifically the Hispanic market.”
Montoya, 32, has been in the business for 12 years and ranked among the nation’s top 10 producing Hispanic loan officers last year, in a NAHREP survey. He fits the profile of what the mortgage industry wants to attract as the next wave of professionals: He is young, Hispanic and speaks Spanish fluently.
He said about 60 to 70 percent of his clients are Hispanics.
Yet, Montoya is one of the few Hispanic, Spanish-speaking originators working in his city. He said that his ability to speak in the language helps build trust. He said that some Hispanics are reluctant to borrow because their friends and family members were victimized by predatory lending during the housing bubble years.
“Many times you end up having the younger generation children translating for the parents, and that is very dangerous,” Montoya said. “You have got [a] 13-or 14-year-old translating what could be the biggest purchase in some of these families lives. When you have got somebody who can clearly speak the language, explain all of the financial terms to them in their own tongue, it is a game changer.”