Mortgage lenders must invest in outreach to diversify their client base

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With the refi market trending downward, lenders are incentivized to think outside the box with their marketing efforts to reach communities that have been historically overlooked. Traditionally "underserved" markets are mostly first-time homebuyers and predominantly multicultural. Three quarters of household growth in projected to come from minority segments over the next decade, according to the Joint Center for Housing Studies of Harvard University.

The market opportunity is clear, but lenders are often far from knowing what actions to take in reaching them. A recent survey of mortgage executives by Cultural Outreach found that 96 of 99 executives said reaching young and diverse markets was a problem for their companies.

At mortgage marketing technology provider Social Survey's recent #CreateWowSummit, where I facilitated three brainstorming sessions on this topic, participants in all sessions expressed a sense of urgency and uncertainty related to this topic. Everyone understood the opportunity for business growth, but most were far from moving from concept to execution. As one executive put it, "We don't have a diverse workforce, but I can't build a diverse workforce because we don't know how to reach them." This chicken and the egg dilemma, along with tightened budgets, had executives and marketers in every session looking for answers.

To find them, companies have to realize that they have to start leading with intuition and relationship, even though it may not always provide an immediate metric for measurement. As my fellow panelist at the summit, Walmer Medina, creative marketing director at Alterra Home Loans, put it, "You have to move away from thinking transactions and instead, lead with emotion."

In order to reach today's consumers and particularly those in underserved markets, companies must understand the value of authentic and relatable storytelling.

"Especially in underserved markets such as the Hispanic community, people want to do business with people they know and trust, and that means you need to know how to connect with people across cultural differences," Walmer noted during the event.

Most lenders have survived the ups and downs of markets with a focus on short-term profit gains. However, companies hungry for new purchase business must adopt new strategies.

To jumpstart new thinking, here are a few simple ways to get started:

Mission first: Customers seek to identify with company values. When those values are communicated clearly through the brand, customers are more likely to engage. For example, Alterra Home Loans recently launched their #OneMission campaign, a company-wide initiative that is a pledge to building wealth for people through homeownership. To be a successful marketer today, you have to think beyond explaining your products or team.

Provide in-language resources: Learning about the home buying process requires reading financial documents with complex wording, oftentimes difficult to fully understand. People who speak English as a second language have the additional hurdle of a language barrier. In order to increase financial literacy and connection amongst this group, lenders must offer education and documents in the languages used in their markets. This demonstrates a level of respect and value for the diverse cultures of the community, while offering resources to customers and their family members.

Recruit diverse talent through professional development and recruiting events: Recruitment channels should reflect the community of customers being served, which requires stepping outside traditional networks and methods. Companies should consider offering professional development workshops rather than recruiting events. Host a panel featuring top leaders in the area and include time for networking. Young people are eager to learn, so draw them in by offering a valuable incentive in forms of education and connections.

Partner with nonprofits in underserved markets: Mission-driven, in-language resources and diverse workforce create a foundation. To be effective, step into diverse markets. This means showing up at community events such as a local Hispanic Chamber of Commerce meeting or a health fair at a prominent church in the area. By attending and sponsoring a booth or offering education, you demonstrate a commitment to the community and gain access to new networks.

For example, TD Bank recently funded down payments to 100 borrowers through NeighborWorks in Vermont. In return, they will increase their affordable lending deals and expand their network through the nonprofit.

These strategies are only as helpful as they are executed on, and they need to happen over a period of time. Continue to show up, lay out a plan of at least 12 months and campaign within the company to gain more support and involvement. Everyone needs to be on board with the initiative for true change to take place.

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First time home buyers Diversity and equality Affordable housing Refinance Down payments Community banking TD Bank