Cos. Seek To Disrupt Mortgage Markets To Make More Latino Homeowners

According to a report by the largest Latino civil rights organization in the country, Hispanic Americans represent a growing population in the housing market and are projected to make up 40% of new households and half of new homeowners in the coming decade.

But "data from the Home Mortgage Disclosure Act (HMDA) paints an uncertain picture of how Latinos will keep pace in the future mortgage market," the report by UNIDOS U.S. noted.

It said the mortgage denial rate for Latinos decreased after the Great Recession, from 29.5% in 2007 to 13.3% in 2017. "Yet, Latinos were still more likely to be denied a mortgage than Whites: the denial rate for Whites was 8.8%," the report said.

Reasons for denials included issues with their debt-to-income ratio (DTI) and credit history, as well as a lack of collateral.

"The future of the housing market will depend on the ability of eligible individuals in often-excluded groups to obtain an affordable mortgage to buy a home. To ensure that the market is serving those individuals, the entities issuing mortgages need to release comprehensive information about their mortgage lending practices," the UNIDOS report said.

A recent analysis of mortgage and census data in New York found that white households in the state were more than twice as likely as Blacks or Latinos to own their own homes, the Rochester Democrat and Chronicle Reported.

The Catalyst: Surging Mortgage Rates

Mortgage rates have surged recently, climbing to a four-month high last week, on expectations that the Federal Reserve will hold off on cutting interest rates in the near-term, according to MarketWatch.

The rates have gone up for three weeks in a row, rising to their highest level since November 2023, the research firm said.

Contract rates on 30-year fixed mortgages rose 12 basis points to 7.13% in the week ended April 12, according to Mortgage Bankers Association data, Bloomberg reported. The effective rate, which includes fees and compound interest, increased to 7.32%.

"Despite the pickup in borrowing costs, purchase activity stabilized last week," wrote Bloomberg's Vince Golle. "The group's index of mortgage applications for home purchases increased 5%, representing just the first gain in five weeks. Mortgage rates are at risk of rising further based on the 10-year Treasury yield that now stands at the highest since November."

Several mortgage lenders are looking to improve the experience of buying a home for Spanish speakers, who number as many as 60 million in the United States.

CrossCountry Mortgage LLC

One company looking to serve the needs of this underserved community is CrossCountry Mortgage LLC, which has more than 7,000 employees and more than 600 branches across the U.S.

The company announced in September that it was launching a new Spanish loan application, which is an expansion of its Hispanic Initiative, designed to advance Latino homeownership.

"Our support for the Hispanic community extends well past translated materials," said Eric Wilson, chief marketing officer. "We have hundreds of Spanish-speaking loan officers with strong roots in the community. Our goal is to be a trusted resource by deepening our connection with this community to generate borrower confidence."

Cross Country said it is also a national partner of the National Association of Hispanic Real Estate Professionals (NAHREP), which puts out an annual "Top 250 Latino Mortgage Originators" report on the top individual Hispanic originators in the U.S.

The private company noted last year that its Phoenix-based originator, Lizy Hoeffer, earned the No. 1 spot on the list for six years in a row. In all, 12 Cross Country loan officers were named on the list.

"This year's NAHREP Top 250 honorees demonstrated resilience and consistency in a challenging market," said 2023 NAHREP President Nuria Rivera. "NAHREP congratulates these Latino mortgage professional leaders who facilitate homeownership for thousands of families and help drive generational wealth in America."

Loan Depot Inc.

Public company Loan Depot Inc. (LDI:NYSE) noted it had placed 37 agents on the NAHREP list, the highest number of any company.

The company said in 2022, Home Mortgage Disclosure Act (HDMA) data ranked them as the nation's No. 3 lender to Hispanic communities.

As part of its Vision 2025 plan, Loan Depot said it continues to find new ways to support the Hispanic community, offering resources including a Spanish-language loan application form, extensive training to meet the needs of first-time homebuyers, and a wide range of loan programs to meet the individual needs of different borrowers.

"Loan Depot is dedicated to creating a more inclusive path to homeownership for all, and our intentional efforts to recruit highly diverse mortgage professionals are a critical part of our commitment to supporting the needs of underserved homebuyers," said Loan Depot Executive Vice President John Bianchi. "It's great to see this recognition for these incredibly talented and committed loan originators."

According to Reuters, 21.93% of Loan Depot shares are held by management and insiders. CIO and Head Economist Jeff DerGuarahian has 7.2%, and President Jeff Walsh has 4.62%.

29.63% is with institutional investors. Cannell Capital LLC has 5.11%, The Vangaurd Group Inc. has 5.24%, Parthenon Capital Partners has 4.86%, Brandywine Global Investment Management has 3.63%, and Knightsbridge Wealth Management has 3.37%. The rest is in retail.

Loan Depot has a market cap of US$751.18 million and more than 323 million shares outstanding. It trades in a 52-week range of US$1.14 and US$3.71.

Bank of America Corp.

As a complement to Bank of America Corp. (BAC:NYSE) US$15 billion Community Homeownership Commitment to offer affordable mortgages, the company in 2022 announced a program called Community Affordable Loan Solution for properties in minority communities, including Latinos, in Charlotte, N.C.; Dallas; Detroit; Los Angeles; and Miami.

The program uses credit guidelines based on factors such as timely rent, utility bill, phone and auto insurance payments and requires no mortgage insurance or minimum credit score. Individual eligibility is based on income and home location. Anyone from any race or ethnicity is welcome to apply, the bank said.

Through the Community Homeownership Commitment, Bank of America, the nation's second-largest banking institution, said it has helped 36,000 people and families become homeowners and provided more than $9.5 billion in low down payment loans and over US$350 million in non-repayable down payment and/or closing cost grants.

According to Reuters, about 59% of the company is held by institutions and about 13% by strategic entities. The rest, about 28%, is retail.

Top shareholders include Warren Buffett's Berkshire Hathaway Inc. with 13.09%, The Vanguard Group with 7.67%, BlackRock Institutional Trust Co. with 3.98%, State Street Global Advisors (US) with 3.68%, and Fidelity Management & Research Co. with 2.06%.

The company's market cap is US$290.54 billion, with more than 7.89 billion shares outstanding. It trades in a 52-week range of US$38.35 and US$24.96.

A Unique Spanish Customer Journey: Beeline Loans Inc.'s Colmena

Beeline Loans Inc. is going further, offering Latino customers a unique "Spanish customer journey" through the process of using Beeline's artificial intelligence (AI) platform.

"Colmena," Spanish for "Hive," will launch in May to meet the unique challenges faced by Latino families in accessing affordable housing and navigating the mortgage system, the company said.

"At Beeline, we believe that homeownership should be within reach for all Americans, regardless of background or ethnicity," said Beeline Chief Executive Officer Nick Liuzza. "The launch of Colmena underscores our dedication to making a meaningful difference in the lives of Latino families and fostering greater financial inclusion."

Beeline launched a proprietary front-end mortgage platform during Q3 of 2020. The company closed 2000 mortgages by the end of 2021, and 2024 is expected to be Beeline's strongest year.   

Despite the timing — which included COVID-19, the highest percentage increase in rates in 25 years, war in Ukraine, and housing inventories and consumer confidence being near all-time lows — the company has gained market share against larger legacy lenders.

"While other mortgage lenders have been slumping, Beeline is gaining traction," wrote Guy Bennett in an article for Yahoo Finance.

Robinhood revolutionized the stock-buying industry by fractionalizing stocks. This allowed people who previously were excluded from the stock market to enter the industry and paved the way for those people who may have been excluded to get involved. Beeline is now doing for mortgages what Robinhood did for the stock market, and it's powered by AI.

The company's chatbot, Bob, already speaks Spanish when prompted, but the new version will instantly detect the language of the consumer and give faster more accurate answers. Colmena users will automatically be routed to a bilingual loan officer to guide them through the process.

"Colmena will feature tailored mortgage products that are culturally aligned to address the specific needs and preferences of Latino homebuyers, plus educational resources to promote homeownership and empower individuals and families to achieve their dreams of owning a home," said Miguel Vega, who is spearheading the initiative for the company.

Vega has 25 years' experience in U.S. Hispanic market consultation and is a National Affordable Housing advocate of Mexican-Texan heritage himself, the company said.

"A mortgage is no candy bar purchase," he noted. "It's a life-changing, potentially scary transaction for anybody, so the ability to transact in one's preferred language and do so in a culturally sensitive way is very important, even if someone's English is excellent."

The company has stated that it offers a variety of options, including refinancing, to consumers through the digital platform. Beeline has built its premise on making homeownership more accessible to a wider, more diverse market, making it an attractive prospect if mortgage rates continue to fall.

Beeline Loans is a private company, and the company reports that its largest shareholder is founder Nick Liuzza. According to Beeline, it has invested US$40 million in the company. It reports that the Cavalry Investment Fund, Atalaya, and Ellington have made significant investments in the company.

Important Disclosures:

1. Beeline Loans Inc. has a consulting relationship with an affiliate of Streetwise Reports, and pays a monthly consulting fee between US$8,000 and US$20,000.
2. As of the date of this article, officers and/or employees of Streetwise Reports LLC (including members of their household) own securities of Beeline Loans Inc.
3. Steve Sobek wrote this article for Streetwise Reports LLC and provides services to Streetwise Reports as an employee.
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