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As the United States undergoes a seismic demographic shift to a younger, more ethnically diverse population, mortgage lenders and servicers who want to grow the scope and quality of their business need to reflect that diversity in their workforce.
The U.S. Hispanic population reached 57 million in 2015, according to the Pew Research Center, and the newest generation of homebuyers — Millennials — are the most racially diverse population in our history, with 43% of adults born after 1980 listed as non-white. By 2024, more than one third of new households being created will be Hispanic, according to the Mortgage Bankers Association.
But Deborah Garcia-Gratacos, founder and president of Deval LLC, which specializes in subservicing for residential real estate assets, said even those stats don’t capture the scope of the opportunity for lenders and servicers.
“The influence that Hispanics have on housing is even bigger than that number suggests, since they accounted for 69% of the total net growth in homeownership in 2015,” Garcia-Gratacos said. “This is the future for our industry, and those who can understand and serve this market are going to reap the biggest benefits.”
Effectively serving Hispanics — whether through lending or servicing — starts with hiring and retaining minority talent.
A recent study by Forbes found that a diverse and inclusive workforce can “ensure that a company’s products and services are respectful of their clients’ cultures.” This is especially important for those companies involved in helping clients buy and remain in their homes.
“Culturally, servicers often don’t understand the multi-generational aspect of Hispanic households, which differs from the typical non-Hispanic household,” Garcia-Gratacos said. “There may be multiple points of view and multiple decision makers, so a more involved approach is called for.”
Hispanic employees can assist companies as they develop operations that take these cultural considerations into account, and help navigate the potential barriers these clients face, especially as it relates to communication.
“Unfortunately, a majority of the documentation in our industry that gets sent to borrowers is in English, which is likely to get discarded if someone’s dominant language is Spanish,” Garcia-Gratacos said. “In addition, when borrowers have questions about their loan, especially if that loan goes into default, they often have no one to call who speaks Spanish. These are significant areas that could devastate Hispanic homeownership, because borrowers will not know if and when terms change, or what remediation is available.”
Fannie Mae echoed these concerns in early 2016 in a story on its site, quoting Zach Oppenheimer, senior vice president and head of customer engagement at Fannie Mae. “The lenders that are best at serving diverse markets have multilingual staff and collateral materials that allow them to reach borrowers in their native language, whether it’s Spanish, Russian, or Mandarin,” Oppenheimer said.
What are the keys to recruiting and retaining Hispanics? Garcia-Gratacos outlined three essentials:
- Management buy-in: There has to be a commitment from the top that is visible throughout the company and its operations that this is a priority.
- Partnerships with Hispanic professional organizations: Networking with these groups can help companies present employment opportunities identify potential opportunities as well as offer scholarships, internships and fellowships for some of the best and brightest while they are still students.
- A mentorship program: Pairing up new employees with more senior players they can identify with helps illustrate the growth potential within a company.
Hiring Hispanic employees should be just one critical aspect of serving Hispanic clients, Garcia-Gratacos said. To be effective, companies need a comprehensive strategy, not just a scattershot effort at diversity.
“It’s not just a matter of having communications here or there that can be transcribed into Spanish. It is a full-on effort to provide bilingual single-points of contact for the Hispanic book of business,” she said. “Servicers can set up dedicated Hispanic loss mitigation and call center personnel supporting these single points of contact.”
Online tools need to be converted as well, which means providing a Spanish website portal, as well as FAQs addressing hardships, with step-by-step action points fully translated in Spanish.
“Servicers also need to be equipped with a complete library of documentation covering all of the alternatives available under loss mitigation,” Garcia-Gratacos said.
The development of such an extensive program to serve Hispanics is beyond the scope of many lenders and servicers, and many would rather outsource these functions to subservicers like Deval, Garcia-Gratacos said.
Deval was built specifically to serve the underserved Hispanic homeowner, employing a team of skilled bilingual underwriters, quality control, customer service and loss mitigation personnel.
The company provides clients with real estate, financial, accounting and management consulting expertise, including due diligence, debt collection, and loan servicing and asset management.
“We also maintain a complete catalogue of documents fully translated into Spanish to run parallel with the current version of English legal documents,” Garcia-Gratacos said. “These efforts underline the significance we see in this borrower segment, and our commitment to serving them well.”
