Home loans for Latinos fast growing market niche

Home lenders see huge market for mortgages to Hispanics

The mortgage industry has enjoyed record profits during the last few years as the market for housing in the United States has grown substantially. Housing prices have been high, and that has led to huge commissions for both lenders and sellers in the real estate industry.

Recent changes in economics, including rising interest rates, have caused the American housing market to slow down somewhat, particularly in California, where prices were among the highest in the United States.

Always on the lookout for new markets, several large mortgage companies have begun to concentrate their effort towards selling more homes to Latino customers. Latinos are one of the largest minority groups in the country, but they tend to own fewer homes than others, for several reasons.

• Language problems. Many Latinos do not speak English, which makes it difficult for them to negotiate with realtors, homeowners and lenders.
• Legal residence issues. Many Latinos do not realize that they can obtain a home loan without a Social Security number, which many members of this minority group do not possess.
• Historically low income levels. This has been changing in recent years, as Latinos become more entrenched in American society.

Many in the mortgage industry are working hard to overcome these obstacles in an effort to court a rapidly growing group of potential customers. Many California realtors are making aggressive efforts to hire more Latino and Spanish-speaking agents in order to make it easier for Spanish-speaking customers to discuss home purchases. Lenders are in step with the realtors, and are hiring more Spanish-speaking people to handle financing, which should take some of the discomfort out of a process that can be difficult even if you do speak the language.

Some lenders, notably Washington Mutual, Citibank, and American Home mortgage already offer plans to provide home loans to some Latinos who do not have Social Security numbers. These institutions will allow some buyers to use an Individual Taxpayer Identification Number instead, which can be easily obtained through the Internal Revenue Service. Other lenders are studying the issue and may follow suit shortly.

The final issue is simply to make the public and members of the real estate industry aware of the issues involved in selling more homes to Latino customers. The National Association of Hispanic Real Estate Professionals, based in San Diego, is working to help sellers and lenders overcome these problems. This trade group offers conventions, seminars and classes designed to help increase awareness of the importance of the Latino community to the industry. In addition, they offer information designed to provide assistance with other problems associated with selling homes to Latinos and other minority groups, including poor credit or lack of credit, lack of down payment, and unverifiable income.

With the prices of homes already sliding and sales beginning to dwindle, the lending industry needs to find additional sources of income. It would appear that the Hispanic market is a large, relatively untapped source of business, and the industry is wise to embrace it.