Homing In on Hispanic Buyers
Spanish Is Becoming a Language Of Both Sales Pitches and Protections

USA (By Sandra Fleishman, Washington Post) December 4, 2004 - ¡Hola! Welcome to www.casa.Countrywide.com, where "su casa propia con Countrywide" -- it's "your home through Countrywide.'' Or to www.wellsfargo.com/spanish, for "el futuro en tus manos" or "the future in your hands." Or how about "Camino a Casa con Century 21," a TV series on the Telemundo network on how to find "a path home with Century 21."

In other words, welcome to the new world of wooing Latino home buyers.

While real-estate-related advertising in Spanish has been routine for decades in states such as Florida, Texas and California -- Wells Fargo says its first ad in Spanish dates to the gold rush days -- the pitch is going national.

Spending on real estate ads targeted at Hispanics has jumped 50 percent in the past three years. Banking and investment companies' targeted ad spending has tripled. While the numbers are still low overall -- less than 3 percent of the budgets of the nation's biggest advertisers -- they're expected to rise quickly to tap into the country's fastest-growing minority group, according to the Association of Hispanic Advertising Agencies.

Home-buying classes and counseling programs offered in Spanish by nonprofit groups have also mushroomed as consumer advocacy groups and housing policy experts have pressed the government and the big government-sponsored buyers of home loans to bring minority homeownership rates closer to those of whites. The Latino homeownership rate has ballooned 21 percent in the last decade, but it still trails that of non-Hispanic whites by 48.7 percent to 76.1 percent and is below the overall national rate of 69 percent.

"The key growth numbers are that approximately 35 million Latinos are living in the country today, about 13 percent of the population, and that that number is expected to triple by 2050," said Gary Acosta, founder of the five-year-old National Association of Hispanic Real Estate Professionals. One in four Americans then will be Latino.

"Most significant is that the average Latino is a full 10 years younger than the white population," Acosta said. "They're in the mid-twenties and they are just entering into the prime home-buying years."

And so the nation's real estate agencies, lenders, title companies and builders are busy translating sales brochures, hiring bilingual staff and launching Spanish ad campaigns.

But some fear that Hispanics are ripe not only for the picking but also for the plucking. Housing counselors and other advocates say many Latinos lack the language skills, education and familiarity with the process needed to protect themselves from bad loans and bad deals.

Hispanic home shoppers "are often really, really uninformed, and they trust people that speak their language," said Jesus Moreno, a housing counselor with the nonprofit Hispanic Committee of Virginia in Falls Church. "But these people . . . take advantage of their trust and their lack of education to put them into expensive loans or into deals that benefit the lenders or the real estate agents."

He said, "There are a lot of Hispanic real estate agents and loan officers; that is not the problem. The problem is the predatory-lending issues."

That, Moreno said, "is why we are coming in the middle -- to build that bridge to the American mortgage process. We are in charge of protecting and advising them so they make wise decisions, and so they are able to compare at least three bank offers, understand them and not get into deals that really hurt them."

Moreno said he apologizes if he seems to condemn an entire industry, but added that in the counseling program's two years, "I've seen terrible deals from everywhere."

Counselors such as Moreno and Mercedes Ross at the nonprofit Housing Counseling Services in Adams Morgan routinely advise clients to attend nonprofit credit-building and financial literacy classes before jumping into the market. The counselors run seminars on the ins and outs of the home-buying process and on how to apply for government-backed loans with financing breaks for lower-income buyers. Neither group recommends agents or lenders, but each will review loan documents before settlement and provide post-purchase help.

Ross this week worked with client Teresita Puerta, a Washington chef who wants to buy her first condominium. She speaks English but is "more comfortable" with Ross's Spanish translations of documents and explanations of the process.

Puerta is using a bilingual agent to look in the District, and is optimistic about finding a one-bedroom unit, but says the rising prices are worrisome. "At this point if I can find an efficiency, I'm going to buy it," Puerta said. "You pay monthly rent and you don't see anything for your money."

Puerta said she feels "confident," having taken the eight hours of home-buying classes required for participation in a city-backed loan program, plus 90 minutes of counseling. She is also pleased because she will qualify for $30,000 in government money toward her down payment or settlement costs, a loan that she won't have to start repaying for five years or until she sells.

Credit counseling is integral to the home-buying process, said Elsa Zambrano, counseling director at the Adams Morgan nonprofit organization. "I truly, truly believe that you have to go over all of this, including how to budget for future emergencies," she said.

"We also warn them that they shouldn't start buying furniture . . . or go out and buy a car" just after settlement. "The home-purchase process is so delicate that it can be a big shock for folks," Zambrano said. "If all of a sudden the furnace breaks and they're just not prepared, there could be big problems. . . . I've seen people go into foreclosure for a $200 repair bill."

Language is one big aspect of reaching out to Latinos, and perhaps the most noticeable. "More than half of Latinos prefer to speak Spanish" in financial transactions, said Acosta, who chairs the Hispanic real estate association.

However, language is not the highest barrier. "Number one is the lack of information and education about the process," Acosta said. "We have to educate the consumer."

A lack of down-payment money comes second and a lack of credit is third, Acosta said. Hispanics, according to census data, have a median income of about $33,455, compared with about $43,300 for all Americans.

Language and the lack of verifiable income are fourth and fifth in a study from a year ago, Acosta said. "But if we did it today, a lack of affordable housing stock would clearly break into the top five."

Acosta's association has recruited 14,000 members, most of whom are bilingual, and hopes to have a chapter in every state soon, particularly in areas such as metropolitan Washington, where there is "a very fast-growing population and a real shortage of real estate professionals who are bilingual."

Silvia Rodriguez of Silvia International Realty Inc. in Rockville is starting a chapter for Maryland; she hopes to have a chapter Web site soon and to help counterparts in the District and Virginia set up chapters.

Rodriguez says the need is great for "development and educational programs for agents and others" to reach out to Latinos, but also "for programs for consumers, like credit programs to show them how important it is to build credit and to improve their credit."

She said, "It's not an everyday thing for them to be watching out for their credit. Hispanics mostly do not want to have credit cards. They do not want to have debts. Many don't even want to have banking accounts. In their own countries it is mostly a cash economy."

Giving Latinos insight into America's financial process will help them get better loans, say consumer groups.

"We know from national studies that Latinos are not given the same financial options information as white families, that that is one way they are discriminated against and that is a broad concern," said Janis Bowdler, a housing policy analyst at the National Council of La Raza, a major national advocacy group based in Washington.

La Raza is working not only to boost housing counseling opportunities and financial literacy efforts but also to team with traditional lenders, giant mortgage investors Freddie Mac and Fannie Mae, and other professional associations to hire bilingual staff, translate materials and educate Hispanics.

Freddie and Fannie and national lenders, such as Wells Fargo and GMAC Mortgage, offer loans that accommodate buyers who are having trouble getting a down payment together or who lack a traditional credit history.

The availability of such loans is still too limited, said Acosta, the head of the Hispanic real estate group. "Fannie and Freddie are starting to recognize that the criteria that they've used in the past [to underwrite loans] are not going to be relevant in the future," said Acosta. "That's helping to change their underwriting. . . . There are products that have already been developed, but they have a ways to go."

He estimated that 20 percent of Latinos have no credit score. "They're not big consumers of credit, they're not big believers in debt. And that used to be a good quality," he said.

His group also endorses using individual taxpayer identification numbers instead of Social Security numbers for some borrowers and letting undocumented Latino immigrants buy homes, two controversial ideas. While some loan products are being offered that accept tax numbers, which are issued by the Internal Revenue Service and do not require proof of residency but are used to report income and file taxes, they aren't widespread.

Acosta said efforts to reach out to the undocumented with ads and to increase the number of bilingual real estate professionals and loan products will impede the efforts of those who prey on unsuspecting home buyers.

"Because they have fewer choices, they've fallen prey to the cons," Acosta said.

"We've seen tremendous improvement in eliminating predators," he said, "but the Latino community should actively try to educate itself. My advice to the real estate industry is to understand that Latinos are looking to work with somebody whom they can trust. . . . And they are a loyal group, so if you serve them well, you will probably get referrals for years on end."

Jose Saiz, a real estate agent with Long & Foster in Bethesda, agrees that Latino clients are loyal and trusting. "They don't know the system at all, but they're very family oriented and they know that they want to buy a house. But they're afraid of the Big-Brother-style system, the big government. And they're often ashamed that they get paid . . . [outside] the system. They don't want to verify their income because they're afraid they might get fired."

Saiz, a native of Costa Rica, said he can understand these fears. When his father bought a home here years ago, "there was a whole lot less paperwork," he said. "Now the contract has gone from six pages to more than 40 pages. It's been done to protect the buyer, but it's kind of overwhelming when you're looking at a dictionary of paperwork."

But the process can be conquered. Moreno this week proudly introduced a reporter to one of his recent success stories, a 34-year-old mother of four teenagers who bought a $225,000 three-bedroom condo in Annandale in October. Maria Funes, who came to Washington at 22 from Honduras and started her career here as a cook, bicycling three hours a day to two jobs, has spent the past 12 years saving, Moreno said.

The high school graduate brought her children here nine years ago, moving from a room in a D.C. house to a two-bedroom rental in Annandale.

Though she spoke no English when she arrived, she built up her credit, got a car and moved to a better job working banquets at the Ritz-Carlton, with a second job at another restaurant. "I worked from 5 or 6 a.m. to 3 at one job and then from 4 to 12:30 at the other," Funes recalled. She taught her children to cook and to take care of one another.

This spring, Funes took the six-hour home-buyer classes required to get a loan through the Virginia Housing Development Authority, followed by individual counseling. The state loan program covered most of her closing costs.

"Her total payment for the whole [condo] at settlement was $1,600," marveled Moreno.

"She says that her whole life dream was to have her own place," Moreno said this week, translating for Funes. "And what she did was awesome."