Servicers Ignoring Latinos Losing Mucho Dinero
BY CONNIE LEPORE
Absolute Lending’s Yamil “Al” Charron would like to say
“gracias” to loan servicing and related industry companies for
not entering the Latino market in Denver and environs. Two times zones
to the east, Arturo Giammugnani voices the same sentiments from his Tampa
office.
Any financial success stemming from what they perceive to be neglect of
their core clientele by mainstream mortgage loan servicers is tempered
in part by the disappointment - and frustration - of seeing their ethnic
brethren needlessly inconvenienced and troubled.
“You hear horror stories all the time,” says Charron, originally
from Puerto Rico. “There are people who take advantage of them -
charging outrageous rates.” The fundamental problem in Denver has
a twin in Florida and anywhere else where Latinos new to these shores
own homes - the language barrier.
Neither Charron nor his No. 1 employee, cousin Alfonso “Al”
Bonini, have ever been strangers to English. They grew up in middle-class,
bilingual families in Puerto Rico, and most of their relatives received
some higher education. Many have earned university degrees. Their Denver-area
Latino (Hispanic, if you prefer) clientele can’t say the same. Even
when they’ve learned English, dealing with mortgage-related questions
can be daunting and baffling. “Imagine the shock of getting an answering
machine when an immigrant calls,” says Charron. “They get confused,
and hang up. Then they can get into trouble with late payments and other
difficulties. I had a lady here about three weeks ago, and it took us
about two hours to get through. Then once you get through, the service
representative may not have the desire or interest to help solve the problem.”
Although Charron and his Florida counterpart Giammugnani, an Argentine
immigrant of Italian descent, recognize there are some big companies actively
engaged in the servicing sector, it’s still a deeply undermined vein
of business - and it is growing at a vertiginous rate.
“Our niche market for the past seven years has been just Hispanics,”
says Giammugnani, Tampa branch manager of Latin Home Loans. He explains
that his company specializes in FHA loans, which it brokers to lenders.
“There are now 2.4 million Spanish-speaking residents in Florida,
and we are the largest minority in Florida.” By the end of the decade,
says Absolute Lending’s Bonini, Hispanics will comprise America’s
biggest minority. The business opportunities for the servicing industry
and lenders will increase apace, he adds. Those who get in on the ground
floor, he suggests, will reap bountiful benefits.
Giammugnani notes that a small number of major players in the servicing
game have taken baby steps toward the Hispanic market. “Some servicers
have ‘800’ numbers, but that’s about it. What I’d
like to see is that Hispanic borrowers get a statement in English with
a translation in Spanish at the bottom. In the origination side, we do
have bilingual forms. In the past, they haven’t paid attention to
the (Hispanic population numbers), and now some of the big companies are
starting to spend some advertising dollars to reach the Hispanic community.”
Giammugnani offers three suggestions to lenders and servicers considering
entering the Hispanic market:
• Set up a Spanish “hot line.”
• Create a small bilingual department.
• Develop bilingual forms.
“The bottom line here is Spanish,” Giammugnani emphasizes.
“The main reason they come to Latino Home Loans is the language.
We assist them with everything, so they understand what they’re doing.
I attend the closing with them.” Like Charron and Bonini at Absolute
Lending, he says he has heard of people getting ripped off at closings,
in part because of the language situation.
Calling Berlitz to teach employees Spanish will not meet all the requirements
of the Latino market, Charron insists. “If a company is looking to
grow its business in our market, it has to look at the long-term picture.
It has to treat us the same as mainstream customers. They need quality
people, which means recruitment, development and training. In fairness
to servicers, there is a shortage of people right now. Not just servicers,
but loan processors, underwriters and lenders. It’s not only in the
mortgage industry, but all industries.”
Exceptions are out there, of course. For instance, Peninsula Mortgage
Bankers Corp. in south Florida. “Servicing the Hispanic community
is a unique niche in the mortgage industry,” says Rosemary McComas,
its vice president. “Hispanics are now the largest minority in all
67 counties of Florida.” The growth of the Hispanic population is
not limited to Florida and California. The population increase in tiny
Rhode Island is due almost entirely to a doubling of Hispanic residents
in the past decade. Over the same period, neighboring Connecticut’s
Hispanic presence went from minuscule to almost 10% of the population.
Colorado’s percentage of Spanish-speaking residents is up to 17.1,
compared to the 12.5% national average.
Within a generation, Hispanics are projected to become the No. 1 ethnic
group in the United States.
It would be a mistake, say Charron and McComas, to put all Spanish-speaking
people under one ethnic tent. “This Hispanic minority, however, is
complex, as it is made up of many different nationalities,” points
out McComas. “The small servicers have an advantage in servicing
the Hispanic portfolio as they can easily tailor to the individual needs
of the Hispanic consumer, forgoing certain automation in order to build
longer-lasting relationships.”
He could not have said it better himself, if you ask Charron. Absolute
Lending has benefited from the opportunities by recognizing the special
nature of Hispanic clients. “You can’t lump us all into one
category,” he says. “So, they need to be able to identify the
similarity between Latinos in different sections of the country.”
Most of his customers, however, are of Mexican descent, he notes.
What it boils down to for companies that have Hispanic clients - or want
their business - is fostering a fast relationship, according to Charron.
McComas sees it the same way: “Unlike the American consumer, the
Hispanic consumer is quite skeptical of the financing industry and often
has limited knowledge of the home financing process. Gaining trust requires
a more humanistic approach to servicing rather than the normal trend in
the industry.”
That, in essence, she says, is the formula for making the American dream
a reality for the burgeoning Hispanic population.
It may also just be the recipe for success in the servicing sector.
This article was previously published in the June 2001 Issue of Servicing
Management.
