Why Hispanic Home Ownership Is Falling

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Hispanics make up the fastest growing segment of the U.S. population but they are increasingly struggling to break into home ownership. Some real estate industry officials are blaming it on current lending scoring models for posing too big of a barrier for many. 

Don’t Be Alarmed: Home Ownership Dips Again

Hispanics make up more than 17 percent of the U.S. population, and this figure is projected to double in the coming years. In 2014, Hispanics had a home ownership rate of 45.4 percent, a 14-year low, according to U.S. Census data.

“Communities of color under the current [lending] scoring model aren’t being accurately captures,” says Joe Nery, president-elect of the National Association of Hispanic Real Estate Professionals. “You don’t have the opportunity to establish your credit.”

Hispanics tend to have extended families under a single roof with a higher tendency to pool resources to break into home ownership. But that often counts for little in traditional scores used by credit-reporting agencies and banks to determine whether an applicant qualifies for a mortgage, Nery says.

“The current [credit] models were established in the 1980s and early ’90s and really don’t account for those methods of payment,” says Nery, also a real estate attorney. “Unfortunately, that limits the access to loan products, especially for those of minority descent.”

The Consumer Financial Protection Bureau released a report this spring that showed 26 million Americans are “credit invisible,” which indicates they have no credit history on file with any of the major credit-reporting companies. About 15 percent of African American and Hispanic consumers were among those 26 million, according to the report.

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