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Fannie Mae Program Targets Diversifying Mortgage Industry
In 2018, Fannie Mae launched the Future Housing Leaders (FHL) program, pairing mortgage companies with interns to open doors for them to work in the industry. The program is specifically intended to recruit more women and minorities into the industry by increasing exposure to career opportunities in sectors like housing finance, real estate, fintech, building, and construction.
“The program is part of Fannie Mae’s intentional effort to diversify a homogenous industry that historically and currently does not reflect the diversity of our nation,” Advisor on the Future Housing Leaders team at Fannie Mae, Jessica Wright said.
The current demographic of the mortgage industry’s workforce is 73% white, 6% Black, and 7% Hispanic. Overall, less than 13% of jobs in the housing workforce include Black and Hispanic or Latino representation, according to a study conducted by Fannie Mae.
A common rebuttal to the diversity argument is that there is a smaller population of Black and Hispanic people in the United States, so we cannot expect an equal amount of minorities and white people in the industry. But FHL addresses this directly on their website by stating white, Hispanic/Latino, Black, and Asian American people currently represent 60.1%, 18.5%, 12.5%, and 5.9% of the U.S. population, respectively. In comparison, the housing industry is 71.6% white, while Hispanic or Latino, Black, and Asian American people represent 9.1%, 7.5%, and 9.4%, respectively.
Ultimately, Fannie Mae believes that a more diverse workforce will benefit minority borrowers and underserved communities. Many who support this idea believe in the identity connection between borrower and broker/lender. Although many Black Americans are comfortable enough working with a white broker, Wright explains that they might feel more inclined to work with someone who is the same race as them or someone who shares the same cultural background.
For example, brokers and loan officers that try to reach out to the Latino community often struggle with the language barrier. When borrowers are able to speak in their first language it helps them understand what is a very complex process, Wright said, and it helps eliminate confusion and complications. Recruiting more Spanish-speaking staff to a brokerage or lending company might be the key to increasing loan volume these next few years, considering that Latinos will account for 70% of homeownership growth in the next 20 years, according to The Urban Institute.
“After speaking to the team I was interviewing with, I was hooked; the housing industry fascinated me … I can honestly say it has been the most amazing experience.”
Mary Wandor, Future Housing Leaders, internship program participant
Yet, a multitude of factors contribute to lack of diversity in the mortgage and finance industries, as well as today’s racial homeownership gap, including historic redlining policies that intentionally segregated neighborhoods, blocking access to quality jobs, schools, and healthcare. Fannie Mae is trying to reverse this trend by creating a more diverse workforce — the idea being that if the industry is more diverse, they’ll be able to serve more diverse borrowers.
How It Works
Fannie Mae connects students with employers who have positions available, such as Capital One, Amerisave Mortgage, and Caliber Home Loans, helping them succeed through paid summer internships and entry-level job opportunities.
“When companies partner with us and join future housing leaders, what they’re doing is essentially affirming their commitment and foraging that pathway for a more diverse industry,” Wright said. “We’re also dealing with a new generation of homebuyers that’s more diverse. We have immigrant households, minority households, millennial households — companies need to be prepared for a diverse demographic of homebuyers.”
The internship program proved to be especially useful to employers when the housing market boomed in 2020. FHL went from having eight employer partners in 2018 to 50 partners in 2021.
“Clearly the market understood the value and our partners became committed to the process,” Wright said. “Through that came a great opportunity to bring students into careers, either through internships or full-time employment.”
Students are allowed to choose the position they want and the company they’d like to apply to. Yet, employers may have different criteria when it comes to choosing interns. Some employers may be looking for students that are closer to graduation or have a specific major that suits the position they’re looking to fill. For example, if an employer is looking to fill a finance position, they may be more inclined to pick an accounting or finance major. Fannie Mae then tailors their outreach to their talent community pool.
But students don’t need to feel boxed into certain positions because of their major. If a student has a background in finance, but a marketing position piques their interest, they are encouraged to apply to whatever opportunity they feel most passionate about. Either way, the student intern will make connections and build their network within the industry.
Fannie Mae provides a 10-week, free training curriculum for students so they can have the best experience when they go into their internship. Through the FHL summer curriculum, students are educated on a variety of topics, including professional development and opportunities for certification. Students can get training through the NMLS and take classes on mortgage banking and real estate. They can also utilize a program from Polygon Research, called Leading With Data Science, and assist students with interview prep. These classes help students build a foundation on industry knowledge.
Fannie Mae also provides partners with tools to help them build an internship program from the ground up, so they can provide additional training as well. Students will be introduced to company leaders and find mentors within the company. They’ll also get to know the company’s culture as well as how this industry works. The FHL group also consults with employers about company culture, why they want to bring on interns, and what their priorities are to ensure their goals are aligned with FHL.
Students may be offered stipends or get paid hourly depending on where they choose to work, but all students are compensated for their work.
Wright says that the FHL program has proven to be a success since its launch in 2018. From 2018 to 2021, the program has led to the hiring of nearly 400 racial and ethnic minority students. Surveys also show 97% of interns say they would recommend FHL to others; 85% of interns say they are likely to pursue a career in housing based on their internship experience; and there’s been a 9.4% increase in the number of interns that had “extreme interest” in pursuing a career in housing.
One particular student intern, Mary Wandor, was an engineering major and knew little about the housing industry before joining the FHL program. “On a whim I went to an interview with Fannie Mae, who prior to the interview, I had no knowledge about,” Wandor said in her testimonial. “After speaking to the team I was interviewing with, I was hooked; the housing industry fascinated me … I can honestly say it has been the most amazing experience.”
Another student, Leonard Henry, found his passion for underwriting through the FHL program. “Like many others, I also did not know that roles such as underwriting existed,” he said. “Any positions beyond brokerage or even being a real estate agent were non-existent as far as I knew.” But after his experience with FHL, he said, “I see a huge opportunity in underwriting positions because there is always a need for people to investigate the deal and the credit of those behind it. The best part is, it’s impactful and the earning potential is high!”
One student, Marissa Frudden, showed great appreciation for her mentor at Lincoln Property Company, who eventually became her boss when she joined full-time as a leasing professional.
“He taught me to be open-minded, pay close attention to detail, be flexible, and help others regardless of your job title and responsibilities,” she said. “I also learned that you can learn from others whether they are your peers, supervisors or subordinates, so always be ready to listen and continue learning no matter how much you think you know.”
More success stories from a diverse array of college students are posted on the FHL website
“When you’re in college, you’re probably not thinking about working in the housing industry,” Wright said. “But there are so many rewarding career opportunities and we would love for students to be very intentional about making that decision really early on. Then you have a chance to grow within your career and try various positions like loan originations, servicing, appraisals, or credit and analytics. Most students don’t realize their degrees are tangible in this industry — they pay well and they’re very rewarding.”
But will the FHL program continue to be as successful, even as the market suffers a downturn? Mortgage rates recently reached a 13-year high, causing volumes in refinance to plummet. Overall, loan originations are expected to drop 33% this year, according to forecasts from the Mortgage Bankers Association, meaning business will be slowing for everyone in the industry. Market conditions like this cause the industry to contract, entering into a chaotic stage of layoffs, mergers, and acquisitions.
“When companies partner with us and join future housing leaders, what they’re doing is essentially affirming their commitment and foraging that pathway for a more diverse industry.”
Jessica Wright, Advisor on the Future Housing Leaders team at Fannie Mae.
Yet, Wright reassures that FHL partners are committed to the program and understand there are different ways to engage, even if there are no open positions at their company. The program still annually offers the FHL summer curriculum, which is not incumbent on market conditions. Students are educated about the market itself so they understand how it fluctuates. Wright also points out that the Housing Matters Speaking Series brings employer partners together to continue the conversation on diversity, inclusion, careers in housing, and the state of housing.
“The housing market ebbs and flows,” Wright said. “We have other mechanisms in which we remain very engaged with our partners, so we can continue to lay the foundation for what’s ahead. Even though the industry has gone down a bit with originations, very few partners have retracted.”
Companies that are not currently looking to hire can still offer training to interns over the summer, or they can open up internship opportunities in the fall. “It’s not a sprint; it’s a marathon,” Wright said. “Our goal is to continue this program through the ebbs and flows.”
“If we do nothing,” Wright continues, “if we don’t even try to pursue this initiative, or initiatives like this that break down inequities in the housing industry, it would take us 114 years to overcome this challenge. That’s why it’s absolutely important to continue endeavors like Future Housing Leaders — it’s so critical and it paves the way to making real tangible changes in the industry.”