Banking, Like the Rest of Society, Is Becoming More Culturally Diverse
By HIF Staff | January 26, 2016
“Mortgage banking needs to reflect the changing demographics in America in order to stay current and remain competitive,” Patty Arvielo, president and co-founder of New American Funding, tells The Home Story (also published by Fannie Mae).
“We need to ask ourselves, ‘How will the future borrower look?’ and prepare ourselves based on that,” says Arvielo.
Of the 13.9 to 15.9 million new household formations the Mortgage Bankers Association (MBA) expects to see by 2024, well over one-third, about 5.5 to 5.7 million, will be Hispanic households — and that represents a huge opportunity for the mortgage banking industry.
To underscore the importance, MBA's chairman-elect presides over the association’s Diversity and Inclusion Committee every year, notes Rodrigo López, executive chairman of NorthMarq Capital Finance, LLC, who currently holds that position. “We are intentionally engaging the real estate finance industry’s leadership because MBA views diversity and inclusion as a business imperative,” López tells The Home Story.
What the Demographics Show
Borrowers in the future will be substantially different from those of past generations, Fannie Mae’s Zach Oppenheimer, senior vice president and head of Customer Engagement, tells The Home Story.
Increasingly, new households will be formed by ethnic and racial minorities, have “extended” family members, be more technologically advanced and buying their first home, he says.
Oppenheimer cites HomeReady™ as one product to help lenders confidently serve these new, more diverse households in a sustainable manner. He says that Fannie Mae developed HomeReady to meet the needs of households with extended family members by allowing a borrower to include household income from a non-borrower member of the household as a compensating factor in qualifying for a loan.
“Your homebuyer will no longer be the one-bread winner family,” agrees Tujuanna Williams, vice president and chief diversity and inclusion officer at Fannie Mae. Williams oversees diversity efforts at Fannie Mae, which recognizes the importance of attracting and retaining a diverse workforce of its own, and then ensuring the inclusion of its message of diversity in all business activities and lender outreach. “All levels of the industry have a responsibility to drive inclusion,” she says.
Making the Move
So what changes are needed to become more diverse?
Radius Financial Group, a mortgage lender in Norwell, MA, uses its Next Generation program to train candidates in diversity from all departments – from operations to sales.
“Over the past five years, we noticed the changing demographics of the home-buying public, and yet most mortgage bankers were old, white and male,” Keith Polaski, the lender’s principal and chief operating officer, tells The Home Story. “There was lots of rhetoric but not much action, so we decided to do something.”
The company’s first class of loan officers in 2015 included six military veterans, one black and two Hispanic, and Radius Financial is currently planting the seeds for the next group.
“We wouldn’t be doubling down on our investment if it didn’t work. Homeownership is one of the foundations of the American dream, and it’s one of the reasons immigrants come here, so we need to be ready to serve them,” Polaski says.
Arvielo suggests lenders need staff who can seamlessly transition between cultures, languages and even approaches from “business-structured to warm-familiar.”
“Building a team with that in mind is paramount because we need to reach out to consumers in a way that resonates with them at an individual level and creates that feeling of trust,” she says.
Adds Oppenheimer: “The lenders that are best at serving diverse markets have multilingual staff and collateral materials” and “are sensitive to the unique needs of a specific audience.”
Source: “The Business Case for Why Lenders Are Embracing Diversity,” by Cathie Ericson, published in The Home Story, Jan. 22, 2016.