Written by Nathan Thomas on August 17, 2004
Written by Nathan Thomas on August 17, 2004
Many mortgage brokers know that they will have to work harder to keep the record volume of business they've enjoyed over the past few years now that interest rates seemed to be on their way up.
In fact, according to a forecast from the National Association of Mortgage Brokers, the volume of mortgage lending is expected to drop 35 percent to $2.5 trillion this year, as refinances slow to about 42 percent of all loans, down from 66 percent in 2003. That's due to mortgage rates that have continued to move up after hitting a 41-year low of 5.23 percent in June 2003.
The result? Finding customers with top-quality credit eager to refinance may not be so easy anymore and mortgage brokers may need to look to different markets than they're used to.
Mexican-American market
The Mexican-American market is now the nation's fastest-growing market – and many are in the market for a new home. An estimated 2.2 million Hispanic households, most of them of Mexican descent, could become homeowners by the end of the decade if real estate and lending professionals reach out to them, according to new research by the Tomas Rivera Policy Institute at the University of Southern California.
The study of 1,400 renters and recent first-time buyers in the Los Angeles, Houston and Atlanta areas highlighted the obstacles that stand in the way for Latino home buyers and the opportunities for real estate professionals who venture into this market.
For example, although the majority of those surveyed have lived continuously in the United States for more than a decade, many are confused about the legal requirements for establishing credit and obtaining financing, and believe they must be either naturalized citizens or legal and permanent residents to buy a house.
Another barrier for Mexican-Americans is a lack of information. "For immigrants who speak little English, it is a daunting task to acquire information and to understand the complexity of the home buying process," the study said. "We found that prospective home buyers either have no information, or even worse, misinformation."
The participants indicated they considered real estate professionals such as mortgage brokers, lenders and real estate agents trustworthy advisors in the homebuying process, opening the door for mortgage brokers to implement outreach programs for potential buyers. To foster ownership among Latinos, the study calls on real estate professionals to serve as trusted intermediaries by becoming part of the Latino community's support system.
To help educate the large and growing Latino market, it recommends the creation of bi-lingual home buying and financial literacy programs and innovative mortgage products that ensure equal access to financing and protect unknowing borrowers from abusive lending practices.
Mortgage XSite users have an added advantage in this area as each Site has 60 pre-built content pages translated by experts into Spanish. This feature allows you to create an immediate rapport with Mexican-American prospects.
If real estate professionals follow researchers' recommendations, the report predicted that the ownership rate among Latinos could reach 53 percent by 2010, an increase of 2.2 million households.
Native-American market
The Native-American market is another often underserved real estate market – and one that could prove to be quite profitable for mortgage brokers. At the NAMB annual convention in Salt Lake City in June, now-former President A.W. Pickel III told attendees they had a responsibility to help certain underserved communities, particularly Native Americans, rural America and the colonias along the border with Mexico.
Pickel cited a General Accounting Office study that showed that in the years 1992 to 1996, just 91 mortgages were made on trust lands. That number had increased to 1,269 loans in 2002.
"Are [trust land mortgages] hard to do? Yes. Do they need to be done? Yes. We as brokers, with our great power need to forge ahead and make the effort," Pickel said. "A major lending opportunity awaits every one of us and not only that, it can be profitable."