SAN FRANCISCO–The so-called emerging markets of minority and immigrant populations often have intense brand loyalty, and yet they largely remain an untapped source of potential income for the mortgage industry.

To reach those potential home buyers, mortgage lenders must have employees who look and sound like and relate to their communities, California Congressman Xavier Becerra said Tuesday at the Mortgage Bankers Association’s annual convention. Doing so will establish trust with those groups and often earn the company dedicated customers who will refer family and friends.

“They’re out there, they’re ready and they’re looking for people they can partner with,” Becerra said.

Becerra’s comments came as part of a roundtable discussion on “Emerging opportunities: the changing landscape of residential finance.” He was joined by MBA staff members and a host of others involved in various aspects of the mortgage and real estate industries.

Becerra, who is Latino, said referring to minorities and immigrants as ’emerging’ markets is no longer accurate. Those populations have been in the country for years, he said, and are considered ’emerging’ only because companies are starting to recognize their purchasing power. Businesses are realizing they can provide a legitimate and much needed service to these communities while boosting their bottom line.

Demographics show those emerging markets will only become more prevalent. The nation’s Latino population is one of the youngest and fastest growing nationwide. By 2008, it is expected to increase by 30 percent, he said.

That leaves open a wide market of potential home buyers, especially considering that the rate of home ownership among Latinos and other minorities trails that of whites. About 75 percent of white families own their homes; among Latinos, the figure is closer to 48 percent.

In some states, Latinos make up a sizable chunk of the home buyers. In New Mexico, they make up about 30 percent of recent home buyers, said Doug Duncan, MBA’s chief economist and senior vice president. That’s followed by California at about 22 percent and Texas at 21 percent.

Yet the country’s increasing diversity is not limited to certain states or even to urban areas, Duncan said. Small communities across the nation are becoming more ethnically diverse.

“There’s an opportunity out here that we as lenders need to serve better,” said Tim Doyle, MBA’s director of government affairs.

But challenges remain in serving those populations. The list includes a lack of affordable housing, lack of financing and credit issues, among others, Doyle said.

Serving those communities “will take a commitment, but also a change in perspective,” he said. For example, credit reporting is often biased against young, first-time home buyers, which describes many prospective minority buyers. Lenders need to change their view of the origination process by expanding it to include reaching out to those communities before they even contact a real estate agent or loan officer. That means playing more of a counselor role for financial literacy and the entire home buying process, including post-settlement, Doyle said.

Lenders also must continue to expand their product offerings to reach more people within those groups, Doyle said. Some obstacles are outside lenders’ control, such as the lack of affordable housing, but lenders can be strong advocates for changes on those fronts. That includes questioning whether home builders are doing enough to help by building houses that these communities can afford to buy, Duncan said, not just trying to fix everything from the financing side.


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