The absence or disparity of women and other minorities is problematic as this lack of diversity creates blind spots on critical issues that impact the underrepresented groups. These blind spots lead to product, systems and marketing designs and programs that don’t appeal to these critical groups. Since non-Whites, including Hispanics, make up approximately 40 percent of the population and women make up nearly 51 percent of our population, do you really want to risk missing these demographics as employees and as part of your customer base? If we’re being truthful, the mortgage industry is not immune. However, an issue that has gone largely ignored for generations is now brought to light and is under a magnifying glass for all to see.
In our industry, there are currently more women than men working in entry level and mid-level management positions. However, if we look at the senior ranks, women are underrepresented. If you look at the leaders running large mortgage banks and those given the opportunities to sit on boards, women and other minorities are dramatically underrepresented.
The “Glass Ceiling” is real, but I am proud that it has been shattered at AFR, as our President and long-time Board Member, Laura Brandao, would attest. In fact, women account for exactly half of all AFR employees up to and including the Vice President level. I am proud to work at a company which represents gender equality. Of course, we recognize that there is still a lot of work left to do.
Why is diversity such an issue?
To oversimplify, many people have a natural bias to favor those who remind us of ourselves. The key is to recognize this inherent bias and to look for diversity in our candidate pools and provide opportunities to recruit and then mentor workers who don’t look like you.
Unfortunately, the issue is systemic. The Federal Reserve sits at the highest echelon of U.S. economic policymaking. Yet, in the banking system’s 100-plus year history, only one African-American and seven women have served as President at any of the Federal Reserve banks. Sad, even ridiculous … but not shocking, right?
As employers, we greatly limit our ability to become more racially and gender diverse by not casting a wide enough net when looking to fill key roles. Despite women earning more degrees than men and a significant uptick in college graduation rates among people of color, minority representation remains an issue.
As an industry, we have taken steps to reduce gender, racial and ethnic disparities over the years, but progress has been incremental and slow. And, there is no silver bullet to magically “fix things” and kill the issue instantly.
The answer must include an open and honest dialogue. The senior executive ranks must involve the underrepresented groups in those discussions. How can we make our work environment more comfortable for all? How can we help recruit other employees from your community?
Retaining the best and brightest requires the same elements that apply to all of us as human beings: Opportunities for advancement, great working conditions, good benefits and salaries. We must also acknowledge that some employees may have issues in their lives that require additional flexibility, including but not limited to workers from economically distressed communities, and single-parents who may have fewer child care resources available to them. More open and inclusive discussions with supervisors about personal situations, including temporary flex scheduling or family leave, are human issues. Retaining great employees requires recognizing that people aren’t only different from each other, but that they may have different needs, at different times, for different reasons.
If you have leaders who are sensitive to personal and cultural needs, race and ethnicity, and diversity of thought, it trickles down … and then inclusion just becomes a way of doing business.
Federal agencies are addressing the issue
Diversity and inclusion have been foundational principles at the Consumer Financial Protection Bureau (CFPB) since it was created in the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010. In particular, the Act created Offices of Minority and Women Inclusion (OMWI)
at all of the federal financial regulatory agencies, including the CFPB. In 2017, the CFPB released a report which outlines several strategies for promoting diversity and inclusion (D&I) in the mortgage industry, presents the business case for diversity, and provides current D&I approaches and practices used by mortgage industry participants.
Diversity and inclusion principles are critical to the Bureau’s work because it is required to support and protect all consumers–approximately 320 million of them–across America. The business case rests on the view that we can best serve the many diverse communities that make up the growing American populace, especially those that were historically overlooked, by reflecting diverse backgrounds and experiences in our own ranks. Applying these principles allows us to tap into a broader pool of talent and draw on new perspectives from employees, vendors, and communities. As our customer base changes, and notably becomes more diverse, there is ample business opportunity in making sure these new and growing market segments are being well-served, and a diverse and inclusive workforce is one key to connecting with a changing customer base.
That was the thinking that prompted the CFPB to reach out to the Mortgage Bankers Association (MBA) and suggest working together to convene a roundtable of leading companies and officials to discuss issues of diversity and inclusion in the mortgage industry, including representatives from the Office of the Comptroller of the Currency, Federal Deposit Insurance Corporation, Federal Reserve, and Federal Housing Finance Agency.
It bears repeating five of the topics the CFPB’s report outlines as innovative solutions for expanding diversity and inclusion within the housing industry:
►The business case for diversity and inclusion
►The importance of leadership buy-in and accountability
►Recruiting, hiring, inclusion, retention, advancement, and engagement
►Broadening the customer base with new business products
►The importance of data
Additionally, the Federal Housing Finance Agency Office of Minority and Women Inclusion (OMWI) released its own plan in October, announcing three strategic goals that it will focus on to increase diversity and inclusion from 2019 to 2021 and fulfill the FHFA’s goal to ensure liquidity, stability and access in housing finance.
►Goal 1: Strengthen diversity and inclusion understanding to drive cultural awareness
►Goal 2: Meaningful diversity and inclusion communication
►Goal 3: Ensure OMWI organizational sustainability
Trade associations take up the charge
The National Association of Minority Mortgage Bankers of America (NAMMBA)
is a national trade association dedicated to the enrichment and betterment of minorities and women who work in the mortgage industry. NAMMBA is a purpose-driven organization that is dedicated to inclusion and supporting advocates for sustainable homeownership in local communities. NAMMBA supports its mission through educating and mentoring mortgage professionals who represent the minority and women segment within the industry and advocating for public policy that supports diversity in the mortgage industry.
Now in its third year of recognizing member companies in commercial real estate finance, MBA's Commercial/ Multifamily Diversity and Inclusion Leadership Award was developed to celebrate company initiatives that were specifically developed and designed to increase internal diversity and inclusion within a company's leadership and employee base.
We’ve also seen a lot of very positive activity in the Mortgage Broker space. The Association of Independent Mortgage Experts (AIME) has launched a Women's Affinity Group, for female independent mortgage professionals across all levels to come together to collaborate, seek support and unite to make a positive impact on the industry. The group is creating a place for sharing experiences, learning from challenges and finding inspiration within each other to empower women to charge forward in the shared quest to grow the independent broker channel.
Diversity and inclusion groups are critically important first steps, but they are insufficient. What is really needed is for those of us in positions of influence to proactively provide opportunities for hiring, promotion and mentorship across a broad spectrum of culture, age, color, gender, sexual orientation, accessibility challenges, as well as persons with cognitive, social, emotional and other non-apparent challenges.
Time and time again, we see that products and messaging from diverse teams, appeal to diverse audiences. In an industry which serves homebuyers from varying backgrounds and every corner of the country, we should strive for all populations to be represented. The mandate goes beyond inclusion–it makes good business sense!
Bill Packer is Executive Vice President and Chief Operations Officer at American Financial Resources Inc. With nearly 30 years of experience in financial services, Bill joined AFR in 2015 and currently oversees Operations, Technology, New Product Development and Marketing as COO. He may be reached by e-mail at [email protected].
This article originally appeared in the March 2019 print edition of National Mortgage Professional Magazine.