Consumer advocates are worried that the qualified mortgage rule will affect the ability for certain underserved groups, like borrowers of Hispanic origin to obtain a loan. But a loan officer in Chicago says in the brief time QM and ability to repay has been in effect, it has not affected her clients.
"I have not seen or run into any challenges," says Siomara Barboza, who recently joined Inlanta Mortgage's Oak Brook, Ill., office. "It is pretty early on but I think that when it comes to the company which you work for, it depends on how prepared and what their flexibilities are" in underwriting.
Inlanta has provided its loan officers with a lot of information about QM, including flyers to distribute to referral sources and other business partners to help educate them about the rule, she adds.
Educating her clients is a part of her services. Barboza keeps track of all the potential leads, people who have been referred to her over the past few years, along with notes on their situations.
"Is it somebody I need to follow up with a year or two years after their bankruptcy? Did I suggest something to an individual about their credit?" Barboza says, adding that in the Hispanic community, there are many people with thin or no credit files and thus a credit score cannot be generated for them.
Her conversation with borrowers who have been working on their credit starts with this advice: if buying a home is truly your goal, you don't want to make any big ticket purchases like a car or otherwise increase your debt load.
She encourages clients to use credit cards to help build a credit profile, but also reminds them that they need to pay off their balances every month.
Typically these borrowers pay for everything in cash. So part of her job "is explaining to them, 'I understanding paying everything in cash is beneficial and how you have done things, but you also have to work on having credit and being able to utilize it and pay it back.' It is coaching people about how that all works and how credit is derived," she says.
So rather than paying cash when they fill up their car, she tells clients to use their credit card—but also to pay the bill at the end of every month.
Many of her clients have taken a year to develop or improve their credit profiles. One client worked over a year to clean up her credit file and now has paid everything off.
"That's definitely a very good feeling when people know you are willing to help them in whatever way, even if it means it will be six months down the road or even a year later" before they qualify for a loan, Barboza says.
Barboza got started in the mortgage business in 2003, a year after she graduated college. It was a time in the mortgage business of heavy refinance volume.
She started as an assistant to the office's top producer. She had been unhappy in her previous job and the producer invited her to work for him while she looked for something else. He would teach her the business. If she wanted to pursue it further, so much the better; if not, at least help him to deal with the crush of business.
This office was in the Lakeview section of Chicago and where a lot of Hispanic clients live. Barboza was the only person in the office who spoke Spanish, and soon she was working with those borrowers as a translator for her boss. Soon she became an originator.
Eventually she ended up working at Bank of America, Wells Fargo and Nationstar Mortgage before joining Inlanta.
Barboza is active in organizations like Hispanic Pro (a business networking organization), the National Association of Hispanic Real Estate Professionals and the Women's Council of Realtors.
The Spanish-speaking borrower has remained a niche for Barboza ever since. Her desire to help goes back even further, to when she was in high school and her parents purchased their first house.
"The loan officer came to the house to explain all of the documents. We were extremely confused and my mom asked me, what did I think," she recalls, adding that many people whose first language is Spanish rely on their children to translate for them.
That memory came back to her when she started working in the mortgage business, Barboza says. So it became a passion of hers working with the Spanish-speaking clients, the ones who might need some more hand holding or explaining about the loan. "It is definitely a way I've been able to give back to my culture," she says. About 50% of her current business consists of people who primarily speak Spanish.
All of her new clients come in through referrals from Realtors, other professionals (including from the networking organizations she belongs to) or past clients. "At the end of the day it is about collectively working with our business partners within [Chicago] who have the same goals as mine…how can we work together to make financing as easy as possible for a particular property," Barboza says.
As part of her business development plan, Barboza is speaking on panels at WCR and other organizations that educate real estate salespeople. But as the purchase market continues to develop, there are likely to be more first-time homebuyer seminars given as well.
The vast majority of her business is from inside the Chicago city limits.
On the North Side of the city, there has been an increase of almost 12% in home sale prices in the last few years. Like many markets nationwide, there is a shortage of homes being offered for sale.
Educating clients on what the true value of a property may be has been a challenge for her real estate referral sources. There are no more bargains to be expected and many homes are selling at the listing price. One client bid $125,000 less than the asking price and the seller did not even respond, Barboza says.
Overbidding can be a problem in these markets. At a WCR seminar, part of her presentation was reminding Realtors that for a sale to go through, unless it is a cash offer, the house has to be appraised at the value it is being sold for.