If credit unions were hoping that outreach to Hispanics will lift them from the doldrums of flat membership growth and expanding Hispanic homeownership will boost bottom line profitability they'd be wise to do more than talk about it.
That was the message from two experts on appealing to the Hispanic market to credit unions that are already committed to what Mercy Jimenez, SVP for Fannie Mae's Single Family Mortgage Business Unit called a "surging market" and Jose Tolosa, SVP of the Hispanic National Mortgage Association called a "market ready for the taking."
The effort to partake of the lending silver platter presented by the Hispanic, African American and Asian minority populations remains relatively untapped in credit union-land today, Jimenez and Tolosa agreed.
In the next 15 years, 70% of all new households will be minority households, and they will represent a marketer's dream: relatively young (median age for Hispanics is 27, for African Americans, 31 and for Asians 35) and together, all groups will represent almost half the growth in homeownership projected between now and 2010.
The American Dream
"I hope I represent the American dream," said Mercy Jimenez. "I was born on a dairy farm in Cuba and when my parents came here they couldn't speak English." They could operate restaurants though, and ran three of those, saving enough to buy a home in South Florida.
"And there is nothing like a home to create wealth," she said, adding, "I know you ACUMA members get that message, but not all credit unions are in the game."
Left out of the game are the two-thirds of CUs that don't originate mortgages. Even those that do, suffer most of their members getting a home loan from another financial institution. "Some 94% of your members go elsewhere," challenged Jimenez. "That's abominable."
Jimenez noted the cooling of the housing market nationally, yet she offered hope that CUs might use the breather to gear up for the opportunity that remains, and there is plenty to go around, she said. "Supply and demand tell a different story; the population is up and it's getting younger."
The minority market for mortgages is a good fit for credit unions, she said, because "this is a market used to getting a 'no' answer, and credit unions say 'yes' more often than banks."
Fannie Mae has had a dedicated credit union team since 2001 to offer support to credit unions involved in writing mortgage loans, said Jimenez.
Forging Relationships
They forged a relationship with Prime Alliance that same year, and another with NAFCU in 2002.
Fannie Mae Community Business Centers are open throughout the country (i.e., three in Florida and four in California). And Fannie Mae's MyCommunity Mortgage, Expanded Approval and Flex Products, Desktop Underwriter and Home Counselor Online programs have been streamlined for ease of use, and loan documents are now available in Spanish.
They even have customizable marketing templates and "multi-cultural materials" for download at efanniemae.com along with analysis of market opportunities by MSAs.
The Hispanic National Mortgage Association was formed in 2003 because the mortgage industry wasn't responding to the particular needs of Hispanics and other minority groups, which kept credit and homeownership opportunities to a minimum, said Jose Tolosa.
Making its first appearance before a CU group, HNMA is hoping that credit unions will respond affirmatively to filling the ownership gap between Hispanics and non-Hispanics, he said, and HNMA is focused solely with doing away with the void.
Tolosa compared the Hispanic market to a "country" of 45 million people with $650 billion. Although census figures call them Hispanic or Latino, they come from many places yet share a common language, with variation.
From first arrival immigrant to full cultural assimilation encompasses just four generations, which means that grandchildren of immigrants are English dominant and identify as "American."
While 76.2% of whites own homes, only 47.4% of Hispanics do, making a gap of 29% that is unexplained by income differences, leaving Tolosa to ask, "Whose burden is it to understand and serve this market? Usually, an industry adapts to serve a market, but from what I see, it's been the consumers who have had to adapt."
In broad terms, the clock is ticking because Hispanics seeking economic opportunity won't wait forever, and their loyalty is worth earning. Still, obstacles such as non-traditional credit histories, a lack of understanding of the mortgage process, combined with a cultural and language barrier aren't easily overcome, allowed Tolosa.
That's why HAUS, or the Hispanic Automated Underwriting System was formed. HAUS developed cultural specific ways to measure creditworthiness of Hispanic borrowers so that those who would otherwise qualify would find funding for home loans and Tolosa manages HNMA Secondary Markets division. The HAUS algorithms deal with income issues specific to the Hispanic market, creating what he called a "Round Box" that meets all lending requirements and results in more approvals without added risk.
ACUMA attendees were the first to hear of HAUS, as Tolosa said it would officially debut at the upcoming Mortgage bankers Association conference to be held on Oct. 22-25 in Chicago. "This will do a lot of good for the community," he said.
CUJ Resources
For info on these stories:
* Fannie Mae at wwwfanniemae.com
* Rich Sands at richsands@coloradohomes.com
* Patricia MacGill at pmacgill@fred.net
