Mortgage Bankers Association chairman David Stevens picked the perfect locale for his latest message about the diversity challenges lenders are going to be facing over the next 10 years.

Stevens made his remarks about mortgage lending in an upcoming minority-majority lending environment at the New Mexico Housing Summit in Albuquerque, which is in a state that is already minority-majority thanks to its large populations of Hispanics and American Indians.

"We're not bilingual," he said, speaking of the industry as a whole. "We don't come from diverse backgrounds. We have a real challenge."

Minorities will account for three-quarters of household growth in the coming decade, he told the audience, which besides mortgage lenders was made up of Realtors, homebuilders and other affiliated organizations. The biennial summit is organized by the New Mexico Mortgage Finance Authority.

"We're going to have to view the marketplace differently," he advised the housing officials. "Understanding the millennial mind is our greatest challenge going forward."

He warned of "an opportunity gap" that could cause lenders to lose the middle class to rental housing. Homeownership rates have been dropping since 2005, and he said there has been a resurgence of multifamily development in cities like New York, San Francisco and Denver. What's required is a balance between renting and owning, according to Stevens.

Lower-income borrowers are also being squeezed by tighter credit standards, he said. Mortgage lending to those with below 640 FICO scores is "almost negligible" currently, and the secondary agencies have cut their business in the lower end of the market to try to avoid risks while they are in conservatorship.

"It's a costly market for low-income borrowers," he said.

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