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New Immigrants Could Give a Boost to Housing Market
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3 Comments ::  :: Investment, Economy |
The slumping housing market could get a $200 billion boost from new immigrant home buyers if mainstream lenders start using alternative methods to score credit, a national group of Hispanic real estate agents said Friday.
Creditors like Citigroup Inc.’s Citibank see recent immigrants as a growing market niche, but those who lack Social Security numbers or legal status in the United States often are rejected by the three major credit bureaus.
A handful of new credit reporting systems — already used by 200 real estate brokers, community groups and mortgage counselors nationwide — allows lenders to calculate risk by evaluating a prospective client’s utility bills, rent checks and other payments.
Should the new reporting methods gain wider acceptance on Wall Street and among secondary mortgage lenders like Fannie Mae, housing markets in places like California’s Central Valley would stand to gain the most, the National Association of Hispanic Real Estate Professionals said.
“Gateway states like California and Texas will disproportionately benefit from the housing boom because so many of their residents are immigrants,” said Gary Acosta, the association’s co-founder, speaking from the group’s annual convention in Las Vegas. “Boosting home ownership among these populations is a positive contribution to the overall fabric of our society and our economy.”
A study by the Joint Center for Housing Studies at Harvard University shows Latinos will account for nearly one-third of the home-buying pool by 2010. That same year, the disposable income of Hispanics will exceed $1.08 trillion, or 9.2 percent of total purchasing power nationwide, according to the Selig Center for Economic Growth at the University of Georgia.
No law requires that buyers be in the country legally in order to purchase real estate, Acosta said. Citibank, for instance, doesn’t require that borrowers be citizens or legal residents of the United States, Citigroup spokeswoman Janis Tarter said.
As with many other minority and immigrant communities, bringing Hispanic families into the mortgage market is a continuing challenge, say officials at Federal Reserve Banks across the country.
Community groups from California to Atlanta have begun offering financial education classes in Spanish as the number of mortgage products available to immigrants and underserved populations has grown.
In Fresno, the housing advocate ACORN Housing Corp. helps clients secure loans by writing alternative credit profiles, which often draw on months of data from telephone bills and employment records, said Lydia Lopez, the group’s local manager.
Once ACORN vets the client’s financial stability, they send them to Citibank, which finances the home loans.
Automating that process by using programs like First American Corp.’s Anthem service, which generates a credit score using nontraditional data, will help new immigrant clients win prime-grade financing and acceptance in the secondary market, said Acosta.
“Right now, those applications might be the last thing to sit in a loan officer’s ’Inbox’ when he’s trying to leave at the end of the day,” said Mark Catone, First American’s senior vice president. “Rather than someone having to review all the information manually, we’re trying to fill in the gaps early on.”
Acosta said the group was discussing the alternative credit programs with officials at Fannie Mae and Freddie Mac.
Both companies require that borrowers for loans they underwrite be legal residents, but Fannie Mae accepts some alternative credit data.
“One of our most widely used products uses rental housing payments and utility accounts to underwrite loans for people who lack traditional credit records,” said Cristina Miranda, a Fannie Mae spokeswoman. “We keep on looking at the impact that certain changes will have on the impact of minority homeownership.” |
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By
HAYEK @
Friday, November 24, 2006 4:59 PM |
what if the immigrant has no way of profing a credit history but owns land in the united states, would that help ???
would citibank in texas give the loan or in all states? please respond |
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By
Stuart @
Thursday, December 28, 2006 12:53 PM |
The number of Latino home owners in this country vaulted a staggering 81 percent between 1995 and 2005, according to the National Association for Hispanic Real Estate Professionals Web site.
The site also reports the ownership rate among non-Hispanics buyers gained just 19 percent during the same 10-year period.
According to NAHREP, Latinos will account for 40 percent of all first-time home buyers during the next two decades. Hispanic surnames already account for eight of the top 10 home buyer surnames in California, based on 2005 research by the CALIFORNIA ASSOCIATION OF REALTORS®. |
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ByLucy @
Thursday, March 08, 2007 12:08 PM | |
It's time that the real estate industry becomes more effective in addressing the needs of other ethnic backgrounds. Industry visionary Stefan Swanepoel and author of the Trends Report says that Minorities are projected to represent 71% of household growth over the next decade; an increase of 8% over the past decade (63%). |
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