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Special Reports
Emerging Markets
'Lenders, Speak the Market's Lingo'
Minorities may not trust financial institutions.
By Lew Sichelman
Printing mortgage documents in foreign languages isn't enough, according
to the leader of Freddie Mac's efforts to reach the growing legion of minority and immigrant homebuyers. "Just
translating documents into Spanish won't cut it," said Craig Nickerson, vice president of expanding markets
at the huge financial intermediary, noting that most borrowers also want to converse with lenders in their native
tongues.
But cultural and language differences aren't the only "unique" barriers faced by minorities, Mr. Nickerson
said at the Mortgage Bankers Association's National Secondary Market Conference here last week.
All would-be homeowners face the challenges of high housing costs, a lack of cash for a decent downpayment and
poor, thin or even nonexistent credit records. But minorities face additional roadblocks, including the lack of
a trusted intermediary and a gross misunderstanding of the lending process, according to the Freddie Mac officer.
Minorities don't trust financial institutions and, to a lesser extent, the real estate community at large, he said.
And they have so many misconceptions about lending procedures that "they are taking themselves out of the
game" before they even get up to the plate.
Complicating the lending community's efforts to reach minorities is the fact there is "no one-size-fits-all
solution," Mr. Nickerson told a conference session.
After family and friends, for example, Hispanics put a lot of their faith in their employers, he said. But African-Americans
put much of their trust in the churches and other faith-based institutions.
Mr. Nickerson, who has spent 30 years in the affordable housing arena, the last seven with Freddie Mac, said some
progress is being made, especially with helping employers become trusted intermediaries. "We're beginning
to see a growing awareness, a sea-change," among employers, he said, noting that the number of companies sponsoring
homeownership fairs and other events has increased markedly in just the last three years.
Freddie Mac also is working to "get good information" to counseling agencies, which often give wannabe
owners poor advice or suggest they take weeks-long classes when, in fact, they are ready to start on the house-hunting
odyssey, according to Mr. Nickerson. "We are working to develop a system that will give agencies quick feedback
on whether or not their clients are ready to apply for a loan," he said. "It won't be a credit decision,
but a guide that says they are ready or they need more help."
It also was pointed out during the session that lenders themselves need to do a better job in hiring minority employees.
"If you are really going to be successful," an audience member told the group, "you need to make
sure your employment base looks like the market you are trying to reach."
Mr. Nickerson agreed, pointing out that right now, minority employment in the mortgage business is primarily a
zero-sum game.
Many lenders are simply hiring minority loan officers away from either other, he explained, when in fact what's
needed is new blood.
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