One size does not fit all: Understating the distinctions of the Hispanic niche marketMariano ClaudioHispanic market
A comprehensive study of Hispanics in America found that by the
end of the decade, Hispanics will account for nearly 14 million
households, and their spending power will reach more than $670
million. "As the Hispanic market keeps growing both in size and
buying power, companies in a wide variety of industries will enjoy
significant marketing opportunities," according to The Conference Board,
which conducted the study. (The Conference Board is the national
research organization best known for producing the Consumer
Confidence Index and the Leading Economic Indicators.)
Mortgage brokers interested in evolving beyond their traditional
customer base should consider targeting this burgeoning niche
market. However, doing so successfully will require more than
simply translating marketing materials into Spanish and hiring
bilingual loan officers. The Hispanic market is extremely diverse,
and mortgage brokers need to take the time to understand the
various demographic and economic differences that exist.
The Conference Board's study, The Hispanic Market in 2010, found
that the Mexican community is by far the largest Hispanic group in
the United States at 6.5 million households.
Central and South American households number 1.6 million,
representing the nations second largest Hispanic community. At 1.2
million, Puerto Rican households are the third largest Hispanic
group in the United States. Finally, Cuban households represent the
smallest segment of the Hispanic population at just over
511,000.
From Peru to Columbia and Mexico to Puerto Rico, Hispanics are
collectively a very passionate people. However, that passion - for
music, food or politics - is grounded in a strong national
identity. Simply applying a generic "Hispanic" label does not do
justice to these rich and varied cultures.
Mortgage brokers who want to target the Hispanic market need to
become amateur social anthropologists to get a holistic
understanding of the beliefs, values and customs of the various
nationalities and cultures in your community. This requires both
observation and participation. Get involved in the social
activities of local Hispanic groups by sponsoring sporting and
musical events that bring these communities together. These events
can be great opportunities to generate leads. Make sure your
translated marketing materials address any unique language
idioms.
In addition to the national and cultural differences, there are
also generational differences to consider. For instance, a majority
of first generation Hispanic immigrants do not speak English. They
will be less knowledgeable about the home-buying process and need
constant attention throughout the process. Ride along with them and
their real estate agent to provide translation service. Stay in
constant contact and keep them apprised of the progress of their
loan application. Conversely, second generation Hispanics tends to
be bilingual, making them more comfortable doing business in
English and more confident about their home-buying decisions.
Finally, it is important to have a thorough understanding of the
mortgage lending limitations and options that apply to Hispanic
immigrants. "The immigrant population in the U.S. presents
challenges to the traditional methods of mortgage underwriting,"
according to the Mortgage Bankers
Association of America (MBA). For instance, many Hispanics do
not have established lines of credit in the United States. However,
there are alternative ways to establish creditworthiness using
rental and utility payments, and money transmittals, and the
mortgage banking industry is working to create an automated system
that can use this type of data to create credit scores.
In its October 2006 issue paper, Mortgage Lending to Immigrants
in the United States, the MBA reported on several other strategies
to serve immigrant home buyers:
- Individual Tax Identification Numbers (ITINs) issued by the U.S. Internal Revenue Service (IRS)
can be used to verify a borrower's income. Since 1996, the IRS has
issued more than 7.2 million ITINs.
- The matricula consular, an official identification issued by
Mexican embassies in the U.S., can also serve as an alternative
form of identification.
Pinnacle
Financial works with Wall Street investors and the insurance
market to identify mortgage products that meet the unique needs of
Hispanics. The types of loans that have proven most successful
include residential alt-A programs that don't require income
verification, loans available to Hispanic homebuyers with ITINs and
programs that require zero percent down (100 percent financing).
There are numerous ways to tap into the $670 million Hispanic
market. Mortgage brokers who take the time to gain an in-depth
knowledge about this burgeoning audience will be rewarded.
Mariano Claudio is executive vice president of emerging
markets for Pinnacle Financial Corporation, an independently owned
direct mortgage lender. He can be reached at (703) 738-9380 or
e-mail
[email protected].
