SAN FRANCISCO - With the changing demographics in the U.S. - as the minority population increases in size and influence - mortgage lenders at the Mortgage Bankers Association's 91st Annual Convention & Expo held last week discussed ways to reach out to these groups.

In his speech, Department of Housing and Urban Development Secretary Alphonso Jackson cited the most recent homeownership numbers that show 51% of minorities own homes today, the highest that it has been historically. He underscored the importance of increasing this percentage by emphasizing that through homeownership, these groups are able to find stability, build equity as well as plant deep roots in the community.

In a separate panel called Emerging Opportunities - The Changing Landscape of Residential Lending, mortgage originators and government officials discussed the different approaches to lending allowing them to cater to the rising minority population in the country. Each ethnic group, they said, has its own particular needs and challenges. Latinos were singled out as the youngest and fastest-growing population group.

Education is key, panelists said. Akron, Ohio, Mayor Donald Plusquellic plugged DollarWise, a financial literacy campaign in high schools launched by the U.S. Conference of Mayors. "The single biggest barrier is the credit score," Plusquellic said, adding that the program teaches kids early on basic cash management and how to use credit.

MBA director of Government Affairs Tim Doyle said that lenders have to change their collective views of the origination process, which begins when borrowers start thinking of purchasing a home. This is especially true for first-time buyers. Financial information and education are crucial at this stage. Another panelist said that some minorities have an "absolute misunderstanding of the mortgage process." The panelist stated that some of these borrowers actually believe they need a 25% down payment or a perfect credit score before they could buy a house, which is not always the case.

Rep. Xavier Becerra (D., Calif.), spoke specifically about the Latino experience, adding that borrowers from this emerging market are looking for someone to trust, adding that brand loyalty "will take you a long way." Mortgage lenders, he said, would need a member of the ethnic community "to pilot you into that arena." He also stated that there is so much untapped potential, citing that less educated and less wealthy Hispanic immigrants have sent remittances back to their home country "to the tune of $30 billion."

Panelists said that traditional credit reporting and scoring systems leave originators with blind spots, and responding to the minority issue is about "dropping business as usual." For example, a barrier that many lenders have to deal with is the component of undocumented income. In Mexico, for instance, a participant said that an "informal economy" exists where a portion of the population does not pay taxes. When these immigrants come to the U.S., they bring this culture with them. He noted that a challenge for mortgage originators is to reach the 10 million to 12 million undocumented immigrants in this country.

Copyright 2004 Thomson Media Inc. All Rights Reserved.

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