Prepare for "significant economic consequences" if the mortgage market can't better serve minorities

Prepare for "significant economic consequences" if the mortgage market can't better serve minorities

The mortgage industry has historically underserved people of color, and if it can’t figure out a way to properly address the problem, the economy as a whole will suffer.

This from a recent article in The Washington Post, which enumerated the ways in which Hispanics in particular are being shut out of the housing market thanks to mortgage policies that don’t accommodate people of color.

Co-authored by Gary Acosta, CEO of the National Association of Hispanic Real Estate Professionals, Jim Parrott, nonresident fellow at the Urban Institute, and Mark Zandi, chief economist at Moody’s Analytics, the article points out that by 2045, people of color will make up more than half of the U.S. population, and over the next 25 years, more than half of U.S. households will be Hispanic American.

“The face of America is changing, and the housing market is changing along with it,” the authors write. “If the mortgage market doesn’t keep up, the nation’s economy will bear the consequences.”

But today’s mortgage system isn’t set up to properly serve Hispanics, who often live with extended family members who contribute to expenses but aren’t considered in the mortgage equation under current underwriting standards, the authors said. Many Hispanics borrowers are also self-employed and, on average, use cash more frequently than credit cards – all factors that hurt their status in the underwriting process.

“Because of the disconnect between how Hispanic households manage their finances and how the rules of underwriting work, mortgage lenders consistently fail to accurately assess the credit risk of a large number of Hispanic borrowers,” the article states. “And the result is as one would expect: only 47% of Hispanics own a home, compared with the non-Hispanic homeownership rate of almost 68%.”

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Phone: 559-708-6460
Dated: May 19th 2019
Views: 24
About Jon: My name is Jon Motsenbocker and I was born and raised in Fresno, California. I've been a licensed ag...

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Jon Motsenbocker DRE #01950257
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