Article by Hang Nguyen The modern mortgage market -- with loans of varying scope and terms -- has turned many Hispanics into homeowners. Take sister and brother Bertha and Manuel Cueva. They don't fit the typical mortgage borrower -- not a married couple and not flush with cash -- a challenge minority borrowers often face. The Cuevas were able to purchase a Garden Grove duplex with loans that allow two households to pool their incomes, plus a down payment of 7 percent, or $12,000. ''It's really hard for a single woman with two children to save money,'' Bertha Cueva said. ''If the bank wanted anything more, I wouldn't have bought the home.'' Liberal lending terms helped Hispanics become Orange County's fastest-growing homeownership ethnicity, according to an Orange County Register review of federal data under the Home Mortgage Disclosure Act. That 1975 law focuses on how well lenders serve borrowers of different ethnic backgrounds and incomes. While Hispanics are more likely to be denied a mortgage than most other ethnicities, conventional loans to them jumped 125 percent from 1997 to 2001 in Orange County. The figures applied to mortgages not issued or guaranteed by the government. Bankers Reach Out Since the late 1980s, bankers have made progress in mortgages to minorities, including Hispanics. Improvements were small at first, and large gains weren't seen until a few years ago, said David Diaz, professor of urban study and planning at California State University, Northridge. He and others said loan fairness only started when community groups challenged bank mergers if the companies didn't do well in reaching out to minorities. Look at Wells Fargo Bank, which more than doubled its loans to Hispanics in five years. The bank beefed up its workforce with Spanish- speaking mortgage officers. It doesn't require a down payment or rely solely on the classic credit score known as FICO to judge a loan applicant. It also considers payment history for rent and utility bills. It counts up to $1,200 a month in undocumented income, so long as it doesn't exceed a quarter of the borrower's income. Bankers also had to teach many Hispanics about the homebuying process. ''Education is our mantra,'' said Antonio Valdez, vice president of multicultural marketing for Countrywide Home Loans. Countrywide hosts a weekly 30-minute radio segment called ''Su Casa Propia Con Countrywide'' (''It's your home through Countrywide''). The Spanish-language Radio Unica show answers consumers' questions about the home-loan process. Some of those questions are repeated in a Thursday column in La Opinion, a Spanish-language newspaper. Countrywide began targeting Hispanics five years ago, and it's kicking off similar programs for Asian-Americans and blacks. ''In 2020 in California, 50 percent of the population will be Hispanics,'' Valdez said. ''We want to be ahead of the curve and capture that market.'' Last year, 16 percent of the company's conventional home loans went to Hispanics. A Growing Market ''It's a good thing to help all ethnic minorities buy a home,'' said Brad Blackwell, national sales manager for Wells Fargo. ''But the fact of the matter is, it's also smart business.'' Loans to Hispanics in Orange County have more than doubled in the past five years because the number of people who applied has more than doubled. Some experts look at the application volume as the result of bankers' efforts to get those consumers in the door. Hispanic applicants who got loans rose nearly 2 percentage points, to 59 percent, from 1997 to 2001. ''Most banks don't want to discriminate,'' said Bob Gnaizda, general counsel of Greenlining Institute, a minority-banking supporter. ''(Hispanics) are too important (to) their market.'' Friendly bankers aren't the only reason the number of Hispanic homeowners has grown. Apartments have become costlier, so many people ''felt better buying a house than to continue to rent,'' said Roberto Gallegos, owner of mortgage broker RFG Financial in Santa Ana. Trouble Spot? Some observers still see problems with how minorities are treated by lenders. Kevin Stein, associate director of minority-banking advocate California Reinvestment Committee, is concerned that not all Hispanics received good loans. He worries that some of the mortgage growth may have been in expensive, subprime loans offered by so-called predatory lenders. The HMDA does not provide information on whether borrowers were charged high interest rates even if they were eligible for lower ones. Some experts say banks can improve. Hispanics at all income levels in Orange County were denied mortgages more frequently than all minorities except blacks in 2001. The HMDA data show that about a third of Hispanics who were denied conventional mortgages were rejected because of credit history. But the HMDA can't answer whether applicants of various ethnicities with the same credit scores were treated differently by bankers, said Raphael Bostic, associate professor at the University of Southern California Lusk Center for Real Estate. ''You're not seeing the whole story,'' Bostic said. ''The HMDA data is suggestive of areas that deserve more study and research, but they are not the smoking gun because they are pretty incomplete.'' htnguyen@ocregister.com
November 24, 2002