NAHREP: Latinos Rejected by 2-to-1 Ratio

For every would-be homeowner of Hispanic descent that is approved for a mortgage, two are turned away because they can't qualify under traditional credit scoring models, according to a survey of Latino housing specialists.And that is a conservative ratio, according to Gary Acosta, a co-founder of the National Association of Hispanic Real Estate Professionals. "Some said they turn away people on a 5-to-1 ratio," the San Diego mortgage broker said at his group's annual convention in Las Vegas. NAHREP chairman Frances Martinez Myers credited the lending community with "making great strides" in helping Latinos become owners, but lamented that the gains have come at the expense of lower credit standards and higher loan-to-value ratios. Maintaining that "continuing to lower the bar may not be the healthiest solution for consumers or the industry," Ms. Myers called on lenders to become more aggressive in using scoring systems that base their ratings on such nontraditional traits as cash income from multiple jobs, cash payments for rent and utilities, and cash remittances sent to family members living in other countries. "Broadening the current credit spectrum to be more inclusive of culturally influenced Hispanic borrower traits is what the industry must begin to do" to close the ownership gap between Latinos and whites, said Ms. Myers, who is senior vice president for business development at Fox & Roach/Trident, a Philadelphia-based realty firm. Lenders that learn to crack the Hispanic credit code can slice into what NAHREP says is a pot of $200 billion in mortgages that are not now being made because Latinos don't measure up under traditional credit scoring standards.