"The population of homebuyers and homeowners in this nation becomes more diverse by the day. In order to serve the needs of these families and grow our communities, we as an industry must genuinely commit ourselves to a culture of inclusiveness that diversifies our workforce and business partners. Without it, we will miss the opportunity to enrich our communities and industry in so many ways."
--DAVID Stevens, president and chief executive officer, Mortgage Bankers Association
As mortgage banking becomes more competitive and lenders look to expand their businesses, companies are discovering that the real opportunities for growth lie in diverse markets. [paragraph] Today, according to the Council of Economic Advisors, millennials (born between about 1982 and 2004) are the most diverse generation in American history. [paragraph] Based on data from Costa Mesa, California-based Experian's fall 2013 Simmons' National Hispanic Consumer Study, 44 percent of millennials identify as a racial or ethnic minority, and one out of every five millennials is Hispanic. [paragraph] To continue to gain market share and compete in increasingly diverse housing markets, lenders must evaluate their own workforces, marketing strategies and company cultures to determine if all levels of their companies reflect this new American identity. [paragraph] Homeownership is being embraced by more people from different backgrounds than ever before. In order to capture this market, lenders need to establish proactive strategies to attract this new customer.
What the research shows
According to Mortgage Bankers Association (MBA) data, the number of households headed by those over the age of 18 reached 122.6 million in 2014. Of these households, 47.6 million were households with individuals between the ages of 18 and 44--an age bracket where home purchases are most common. Contributing to this total were 8.9 million Hispanic households, 6.6 million African-American households and approximately 3 million Asian households.
MBA research finds homeownership demographics will only continue to change, projecting that the United States will see a total of 15.9 million additional households across the country over the next decade--with nearly 70 percent of this growth coming from non-white households (see Lynn Fisher and Jamie Woodwell's July 2015 MBA report, Housing Demand: Demographics and the Numbers Behind the Coming Multi-Million Increase in Households).
The Hispanic population alone is projected to contribute 5.7 million additional households to the total decade's increase--a 36 percent increase from 2014.
MBA also projects there will be 2.4 million more African-American households and 1.9 million more Asian households by 2024.
Significant changes in the demographics of the United States coincide with the need for significant adjustments to the housing industry to reflect a shift in the needs of the American population.
In 2013, MBA's board of directors created a Diversity and Inclusion Committee as a means for industry senior executives to identify and share best practices others can incorporate into their business strategies and workforce cultures to quickly embrace changing homebuyer demographics.
MBA made a conscious decision to become an industry leader in the elevation of diversity and inclusion issues within the business of housing finance. MBA believes that the promotion of diversity and inclusion within the mortgage industry is not only the right thing to do, but is critical to the industry's future financial success.
Good for business
The sweeping changes implemented since 2010 under the Dodd-Frank Wall Street Reform and Consumer Protection Act have significantly impacted the housing finance industry and the way the mortgage industry operates.
One often-overlooked component of these reforms is Section 342 of the Dodd-Frank Act. Section 342 broadly mandates the creation of agency diversity standards and the creation of an Office of Minority and Women Inclusion (OMWI) to establish standards and implement diversity and inclusionary policies and practices within regulated agencies and their respective entities.
The Final Interagency Policy Statement Establishing Joint Standards for Assessing the Diversity Policies and Practices of Entities Regulated by the Agencies (standards), published in June 2015 by the Office of the Comptroller of the Currency (OCC), Board of Governors of the Federal Reserve System, Federal Deposit Insurance Corporation (FDIC), National Credit Union Administration (NCUA), Consumer Financial Protection Bureau (CFPB) and Securities and Exchange Commission (SEC), is now effective. (For more information on Section 342, see Jay Patel's article, "Reinvention," in Mortgage Banking's October 2014 issue.)
Contrary to some common assumptions, diversity and inclusion, as supported by Section 342 and MBA, is not affirmative action. It is about change.
Fostering a more inclusive environment and embracing diversity as a business strategy helps companies be more innovative through exposure to a variety of thought and experiences.
A diverse workforce culture ultimately encourages employees to maximize their growth and potential in the creation of enhanced offerings to untapped markets.
According to current MBA Chairman and former Diversity and Inclusion Committee Chair Bill Emerson, chief executive officer (CEO) of Detroit-based Quicken Loans Inc., "Our companies should look more like the communities we serve today and will continue to serve...