Executive offers keys to expanding loan access
One of the most important roles a mortgage broker can have is to serve their local community, not just through mortgage transactions, but by giving back.
Whether it’s being a trusted advisor in the community or helping those who may have thought the dream of homeownership was out of reach, brokers’ presence in communities is invaluable to those areas.
While mortgage brokers have done so much to help so many, there are still underserved and overlooked communities in this country that could use a helping hand. Many of the residents of these communities need the American dream of homeownership to change their family’s financial trajectory.
One mortgage executive has worked hard to help those in underserved communities, and he thinks it’s an area where there needs to be even more focus.
Hector Amendola (pictured top), president of Panorama Mortgage Group, said that while brokers are doing loans to make a living, the true purpose goes beyond the bottom line.
“I think it starts with having a presence in the community,” Amendola told Mortgage Professional America. “Because the reality is that any loan officer is going to be willing to do a loan for any client. Because at the end of the day, if what you do is loans, and that's what puts food on the table for you and your family, then I'll do it for whoever.
“But what we don't see often when we're dealing with underserved communities is we don't really understand what it is that they're dealing with, or how they might be different.”
Understanding the differences
When Amendola talks about understanding differences, sometimes it comes down to changing a broker’s built-in assumptions about lending situations, especially in underserved communities.
“I've done several loans in my lifetime where it's two families moving into a house,” Amendola said. “You think, ‘Well, that's not true. They're not both going to move into the house. They're just using that to qualify.’ Once you're in the communities, and you're talking to these people … sometimes, back in those days, I would go to their house to take their application. I went there, and they really were all living there. This is not like something crazy, and so it is different.”
Two of the challenges that overlooked communities are often dealing with include a lack of access to loan products and challenges in getting borrowers qualified for conventional loans.
“When we're talking about an underserved community, we're usually talking about a lack of access to capital, or a more difficult type of employment that is more difficult to document, and makes it harder for them to qualify,” Amendola said. “They end up getting a worse mortgage because of it.
“I think the biggest thing is to truly understand the homebuyer, to understand their barriers, and then, you know, and then you can find the program that best fits them and helps them with those barriers. Over time, if you do that enough, you start seeing more programs come out that actually help them.”
Programs to help
Amendola said one program that can be a big help in underserved communities is a rehab loan, allowing for the homebuyer to not only purchase the home, but also get additional funds for renovation.
“What those loans basically are is you can buy a house, and in that same loan, you can get extra money to do a rehab on the house,” he said. “So you buy a house that maybe needs appliances, maybe it needs new flooring, a paint job, maybe a new roof, something along those lines, and you finance the cost of that.”
The reason that can be so important for homebuyers is the alternative is that they take out consumer credit cards with high interest rates and purchase renovation supplies. This can put these buyers in a tough spot, with a large balance of revolving debt added immediately after closing.
“Some people don't consider that underserved, but if you stop and pay attention, most homebuyers buy a house, then they're probably going to go to Home Depot and get a credit card,” Amendola said. “They use that credit card to buy a new floor. Then they're going to go to Best Buy so they can buy their appliances. Suddenly, they're in crazy debt that we didn't even factor in when we were doing the loan.
“That debt-to-income ratio that I just stretched to the max to qualify my borrower is suddenly beyond that, and they wouldn't have qualified for that house today. These rehab loans, where you actually factor all that in, become a big deal for a homeowner, because now I'm actually looking out for them.”
Getting a chance to help those who might have thought they would never buy a house is one of the parts of the job that Amendola likes best.
“That's the fulfilling part of the job,” he said. “Seeing somebody come in, and they were probably terrified they wouldn't qualify. They were scared they're going to get turned away, and then suddenly you're saying, ‘Here you go, here's the keys.’ That's a fantastic thing.”
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