877-446-0004

Retail    |    Brokers





Inclusive Lending Practices

Dec 15, 2021

Happy husband and his wife sign a mortgage

Are you set up to serve all potential borrowers in your area?

We continue to see data that show discrepancies in how lenders treat members of different ethnic groups and people with disabilities for home loans. You have the opportunity to set yourself up to help local borrowers get better deals and better treatment than they might get elsewhere.

Race and Mortgage Lending

Although many lenders are working to provide more equity lending to non-White ethnic groups, data still show that Latino and Black borrowers receive higher interest rates and pay more in closing costs.

Additionally, lenders are unbanking or underbanking a higher percentage of Blacks and Latinos than Whites. This leads these borrowers to non-bank mortgage lenders with poorer terms.

Language barriers may also prevent some qualified borrowers from applying for mortgage loans.

Disability and Mortgage Lending

Borrowers with a disability may also be at a disadvantage. Under their lending requirements, some lenders may not accept disability, Supplemental Security Income (SSI), or Social Security Disability Income (SSDI). Potential borrowers may not use standard application forms if they have visual impairments or engage with lenders if they have hearing impairments.

These borrowers may also have difficulty finding a home because they need special adaptations that are not common.

How Can You Help?

Start with your own office and practices. Whenever possible, work with lenders that offer applications and support in various languages. That way, you can support borrowers, no matter what their native languages are. When you receive offers for your borrowers, make sure they’re in line with what you see across the board. If the interest rates or terms seem out of the ordinary, connect with the lender to see why the terms aren’t comparable with offers for other clients. You can be a strong advocate to help all your customers get the best loans. 

Also, consider hiring support staff and other brokers who speak languages other than English. If you can’t bring someone on full time, you might use local interpreters to help bridge communication gaps. This can be critical if you have potential deaf or hard of hearing borrowers and use American Sign Language (ASL) to communicate. Even when provided with written materials, the legal jargon and fine print often require you to translate. Therefore, it is important to say it in a language that works for your borrowers.

Adaptive applications that visually impaired borrowers can use with screen readers or other accessibility tools can be helpful. Ask your lenders how well their applications and materials conform to accessibility best practices. Consider testing the materials yourself using accessibility tools built into your devices or the World Wide Web Consortium’s evaluation guidelines.

Finally, as you market your inclusive lending services, you might consider going through different channels to better connect with diverse borrowers. For example, Black and Latino borrowers may prefer a more relationship-based interaction or meet a mortgage broker through a word-of-mouth referral than a web search. You might do outreach with nonprofits that serve these communities to learn more about their needs if you’re not part of these ethnic groups. Get to know the Realtors that work with Black and Latino communities to get further insight into how the housing market is treating them and where you can help improve the outcomes.

The same guidelines can help you better serve borrowers with disabilities. Nonprofits can help you learn more about the obstacles each borrower might face when trying to get a mortgage and see how you can help improve his or her experience.

Ensuring that your practices and those of the lenders you work with are inclusive will allow you to help even more people experience the joys of homeownership.

References

Home Lending Data Reveals Discrepancies in Latino Mortgage Lending: https://ncrc.org/home-lending-data-reveals-discrepancies-in-latino-mortgage-lending/

High-income Black Homeowners Receive Higher Interest Rates than Low-income White Homeowners: https://www.jchs.harvard.edu/blog/high-income-black-homeowners-receive-higher-interest-rates-low-income-white-homeowners

The majority of low-income Hispanic and Black households have little-to-no bank access, complicating access to COVID relief funds: https://www.hispanicresearchcenter.org/research-resources/the-majority-of-low-income-hispanic-and-black-households-have-little-to-no-bank-access-complicating-access-to-covid-relief-funds/

Access to Credit for Adults with Disabilities: https://www.nationaldisabilityinstitute.org/wp-content/uploads/2018/12/access-credit-brief.pdf

Evaluating Web Accessibility Overview: https://www.w3.org/WAI/test-evaluate/