If the mortgage industry wants to thrive, it needs to change from within
You can’t be it if you can’t see it.
Representation matters, and in a field as large as the mortgage industry, which serves millions of Americans, it matters even more that the faces of the industry reflect the customers that they’re helping to get into homes.
“I think the powers that be need to embrace diversity and be inclusive of it. One thing is to say yes, we want to be diverse, and another one is to actually provide that platform and that opportunity for other minority groups to have a voice within those companies. And diversity doesn’t just mean Latinos or African-Americans, or Asians, it means being inclusive of all the voices that exist,” said Eva Melgarejo, director of multicultural affairs at New American Funding.
The research is in; a 2015 report, “Diversity Matters,” by McKinsey & Co., found that being diverse is just good business sense. Among the top findings:
- Companies in the top quartile for racial and ethnic diversity are 35% more likely to have financial returns above their respective national industry medians.
- Companies in the top quartile for gender diversity are 15% more likely to have financial returns above their respective national industry medians.
- In the United States, there is a linear relationship between racial and ethnic diversity and better financial performance: for every 10 percent increase in racial and ethnic diversity on the senior-executive team, earnings before interest and taxes (EBIT) rise 0.8 percent.
Companies often tout diversity as a priority, but it’s not about checking boxes; it’s about companies supporting an environment and a culture that make space for people from different backgrounds. If given a chance, the best people are able to thrive regardless of age, race, gender, or ethnicity. For the best companies and employers, it happens organically.
Sue Woodard, industry executive and chief customer officer at Total Expert, said that the right companies have a fantastic blend of both men and women in particular. Total Expert has grown significantly over the past year, and the need for an equally balanced workforce isn’t often discussed—because it’s already there.
“It’s not like, ‘we have to make sure we have more female developers.’ We just have female developers because we have the best people for the job. I do think that companies are being a little more intentional about it, but I hope that people are doing it with the right intentions and reasons in mind, getting the best people to service our industry and the best people to be on a team regardless of gender.”
A commitment to diversity happens on many fronts, and in more ways than one. One way to diversify is through specific recruitment efforts. Some companies focus on non-traditional sources and training programs in order to recruit talent from particular communities.
Breaking into the mortgage industry is a particular pain point for people in communities where the mortgages and mortgage industry as a whole isn’t a part of the conversation and so it’s not often recognized as a career path.
Gwen Garnett is the program director for the Center for Financial Advancement at HomeFree-USA, a homeownership development, foreclosure intervention and financial coaching organization. She spent the last 10 years of her 25-year career in the mortgage industry and she said that within the industry itself, the lack of diversity is about exposure and access.
“When I worked in the business and I saw new people come in, a lot of times, it meant coming in through relationships that people already had. Because nobody goes to school to get a degree in mortgage; they come in from all kinds of backgrounds, and if a person has some core capabilities, basic skills, they can learn the mortgage business,” Garnett said.
But you can’t learn the business, she argues, if you don’t have an awareness of the mortgage industry, which is why HomeFree USA launched the Center for Financial Advancement. The CFA empowers students at Historically Black Colleges and Universities (HBCUs) to successfully make and multiply money through financial management and careers in real estate finance. Their first partnership was with Fisk University, where over the course of the school year, the students were exposed the mortgage industry through seminars in credit, student loans, debt, and savings, as well as home ownership and mortgage careers.
“We put them through a fair amount of training, but we also do sessions where they get exposure to individuals of color who are already in mortgage at senior levels and have some very candid rap sessions for them. And it all leads to internships and jobs,” Garnett said. “We started in September, and this summer we have students interning at the Mortgage Bankers’ Association, at Bank of America, Quicken Mortgage, we have them working already in internships. Because that’s a measurement for us: get partners visibility to the students and the students into these particular areas.”
The students obviously benefit from exposure to an industry that had previously been unknown to them, but sponsors of the program benefit as well.
“They’re getting access to the talent but also, they’re also getting access to faculty, alumni, parents, so you have an opportunity. It’s funny, some of the young people that we’re working with, they’re going back and sharing information with folks in their families and so there’s a domino effect there in terms of access as well. So the company gets to build some increased brand awareness in the communities that we’re serving.”
Gary Acosta is the co-founder of the National Association of Hispanic Real Estate Professions, and says that there are barriers of entry that affect the mortgage industry in a way that isn’t so in other related fields, such as real estate. For real estate professionals in most states, there aren’t a lot of costs or training involved in becoming a realtor.
“On the mortgage side, there’s a little bit more required now especially with licensing and training, there’s just a little bit higher barrier of entry. And I think just intuitively, Hispanics have—I don’t want to say an aversion, but just the financial services industry in general has not done as good a job of reaching out to the Hispanic community as the real estate community has as well,” Acosta said.
This isn’t just about race, ethnicity, or gender; it’s also about age. Only 7.3% of NAHREP’s top 250 Latino Mortgage originators are over the age of 50, which reflects the younger Hispanic demographic relative to the age of the general population.
As the mortgage industry changes to reflect the needs of homebuyers, we’ve seen companies get left behind if they can’t remain current and relevant. This is true for technology, and it will prove to be true in terms of communicating and relating to a younger, more diverse demographic as they buy homes.
“I think everybody on both sides recognizes that the demand from the consumer is going to require a much more diverse professional infrastructure to be able to support that in the coming years.”