Regulators are pitching fair-lending as a marketing opportunity - after years of threatening banks with penalties for not being responsive.
"We had a whole industry designed to sell single-family homes in white residential neighborhoods," said Richard C. Walker, assistant vice president and community affairs officer for the Federal Reserve Bank of Boston.
"There are ways to fulfill" minority lending programs for those who want to make the effort, Mr. Walker said.
Mr. Walker called for mortgage bankers to train their loan officers to give to give minority borrowers the respect they deserve.
Lenders should acknowledge the intelligence and commitment to homeownership that minority borrowers display, Mr. Walker said. The staff should be well schooled in customer service, before and after closing. Such recognition by banks would represent a shift from a long held strategy of using minority loans to fill Community Reinvestment Act requirements, and not much else.
Loan applications from immigrants should be evaluated the same way applications from mainstream customers are viewed, Mr. Walker said. And if applications are turned down, second and third reviews should be conducted, he said.
The commitment to minority lending programs should extend to employees who run them. Loan officers should not be paid less because they are working with minority applicants, Mr. Walker said.
Speakers at a recent minority lending conference in New York indicated that it would be well worthwhile for lenders to turn their attentions toward nonwhite borrowers.
Analysts at the three-day event, sponsored by Strategic Research Institute, said that within 60 years half of the U.S. population would be nonwhite.
Already the Hispanic population in the United States is equal to the population of Canada, said Gary L. Berman, president of Market Segment Research and Consulting.
The United States is more of a "salad bowl" than a melting pot, he said, with new immigrants holding on to their individuality instead of simply trying to blend in.
The definition of what is mainstream in America is broadening, he said. "Salsa has beaten out ketchup as the No. 1 condiment in the United States."
Mortgage-related businesses need to respond by developing programs to target different customer types, Mr. Berman said.
Choose your advertising company carefully, recommended Charles Ross, president of Financial Media Services Inc., and chairman of the conference.
One group that attempted to develop an ad for black consumers showing a high-school reunion was botched because of a bad choice of background music. Their choice for typical music black teenagers listened to in the 1970s: the score from the movie "Saturday Night Fever." The ad bombed, Mr. Ross said.
"When you're targeting African-American audiences, you've got to assume you don't know anything," he added. There is a myth that the market is low- income, but the number of blacks with annual incomes of $50,000 or more increased more than 50% in the 1980s, he declared, adding: "Don't let what you see on TV influence you."
Mr. Ross also stressed the use of radio advertising to reach minority audiences. He said radio continues to become more segmented, allowing advertisers to focus on a narrow audience.
The approach will cut down on the unease that foreign-born citizens feel, Mr. Walker said. "One of the major fears of immigrants is the fear of discrimination," he asserted.
The borrowers do have cause for concern, observers say.
Minority lending "is an industry where allegations of discrimination are rampant," said Phyllis Rosenblum, senior vice president at Republic National Bank.
To give greater credibility to the business, Republic and several other New York banks teamed with community housing organizations to supply mortgage funding to ethnic neighborhoods.
Neighbors Helping Neighbors is among the associations the bank consortium is working with.
Mariadele Priest, executive director of the Brooklyn, N.Y., agency said she has seen all too many cases of foreign-born citizens being taken advantage of in the past.
"I'm very concerned about immigrants," Ms. Priest said.
But it makes sense for lenders to work with these citizens, not take advantage of them, Ms. Priest said.
"The more you empower people to make their own decisions, the more comfortable they will be," she said. "Ultimately they will refer people to you."
Community-based outreach is indeed imperative, other speakers said.
Building trust with these residents "is probably the most important thing you can do," said Patrick J. Kelly, manager of community development for United Jersey Bank. "There's more to attracting them than having bilingual brochures."
There are signs of progress, said Mr. Walker of the Federal Reserve.
Multibank consortiums, in which lenders band together to create affordable housing programs are an example of progress, he said. "There is some good movement in that area."
Also, efforts on the part of Fannie Mae and Freddie Mac are making it easier for mortgage bankers to commit to minority applicants, Mr. Walker said.
