RISMEDIA, March 12, 2007-Fair and balanced reforms that include separate licensing, required training for originators and full disclosures on higher risk loans is what Hispanic real estate professionals favor in the mortgage suitability debate being waged by lawmakers, according to a survey from the National Association of Hispanic Real Estate Professionals (NAHREP). At stake, if drastic measures are adopted, is access to credit options most often used by Latino home buyers, according to the 14,000-member trade association.
"Our members unanimously favor new standards that ensure Hispanic home buyers are treated fairly, make sustainable homeownership possible and keep credit options accessible to Latino families," says Felix DeHerrera, NAHREP's newly installed chairman. "Reforms that protect consumers and strike a balance for practitioners that work with the underserved community is absolutely key to keeping the door open to homeownership."
A survey of 500 NAHREP members including opinions from real estate agents, mortgage professionals and others in the business, revealed the following:
- 56% of respondents were Realtors; 30% were lending professionals; 14% work in some other professional capacity within the business;
- 74% of NAHREP members that responded to the survey said they believe full disclosure and stricter standards for loans with multiple layers of risk are appropriate to ensure that applicants are able to handle payment increases;
- 93% of NAHREP members that responded to the survey felt that lack of knowledge about the mortgage process is a key reason why Hispanics are vulnerable to predatory practices. An overwhelming majority of respondents also identified language barrier as a factor;
- 89% of NAHREP members polled said they are in favor of separate licensing, specialized education standards and required training for mortgage originators;
- 74% of respondents favor elimination of incentives provided by lending institutions that reward originators for giving consumers prepayment penalties;
- 76% of respondents support risk-based pricing;
- 69% of respondents favor capping mortgage broker compensation with the majority favoring a 2-3% total compensation cap;
- Nearly 30% of respondents said that more than half of first-time Hispanic home buyers would not qualify for a home if sub-prime loans were not available for their use.
Hispanic home buyers are far more likely than others to rely on higher cost loans with more flexible terms. While the non-prime loans constitute 19% of the mortgage market, nearly one in four loans was made to first-time home buyers, stated Doug Duncan, chief economist for the Mortgage Banker's Association in recent testimony before the Senate Committee on Banking, Housing and Urban Affairs. Hispanics are estimated to account for as much 30% of the sub-prime market (HMDA).
With more than $2 trillion of U.S. mortgage debt coming up for interest rate resets, many homeowners will be faced with mortgage payments they can no longer afford. Sixty-five percent of NAHREP members that answered the poll, said they are currently counseling homeowners that are in this very situation and no longer able to afford their house.
For more information, visit www.NAHREP.com.