Creating New Opportunities to Build Wealth, Homeownership and Diversity

(Editor’s Note: This story originally appeared in MBA Insights.)

It’s been nearly 10 years since the Great Recession, but for many Americans, it still feels like yesterday.

An estimated seven million Americans lost their homes to foreclosure between 2007 and 2012. While all demographics suffered, African-Americans were hit particularly hard; by one estimate, African-American families lost nearly $200 billion in wealth and equity.

Now, with the economy well in recovery and that housing market seemingly hitting record levels on a monthly basis, a new program aims to ensure African-Americans have the opportunity to not only restore past wealth, but to build new wealth.

The Center for Financial Advancement–a partnership involving HomeFree-USA, the Mortgage Bankers Association, Wells Fargo and Freddie Mac–launched this past September, focusing on career opportunities and financial education at Historically Black Colleges and Universities. It is designed to promote financial literacy, homeownership and expand diversity and inclusion in the mortgage industry, with the goal of preparing African-Americans both for homeownership and for an empowered life with financial freedom.

Through this program, the Center will elevate money management skills, teach students about credit and homeownership plus position many for a financially rewarding career in the mortgage industry. Fisk University in Nashville, Tenn., is the first HBCU to participate in the program. Not coincidentally, Marcia Griffin, founder and president of HomeFree-USA, is a Fisk graduate.

“There is desire in the African-American community to move up and to uplift ourselves–we just need a little bit of guidance, some direction and just a bit of advice,” Griffin said. “The reality is this: money is made off the backs of those who don’t know. The less we know, the more somebody’s going to make off of us. The less we know, the more opportunity there is for rip-off. I’m here to show the mortgage, real estate and finance industries what we can do–not just HomeFree-USA, but what HBCUs can produce.”

The Center will host educational events and bring in speakers from all segments of the financial services industry, from banks to mortgage companies to nonprofit counseling organizations. Griffin described the program as a “new way” to connect the mortgage industry with the African-American community. “With connections to both the mortgage industry and the HBCU sector, HomeFree-USA, through the Center for Financial Advancement, is able to not only connect with the students, but we’re connecting with the parents, the faculty and the surrounding community,” she said.

One goal is to create a path to homeownership for students by providing financial education, as well as career growth opportunities.

“The mortgage industry has a tremendous opportunity to work with Historically Black Colleges and Universities and nonprofit leaders to ensure that students are well prepared to be the homebuyers of tomorrow,” said Frank Sims, immediate past president of Fisk University, who worked with Griffin in establishing the Fisk CFA. “By providing college students a sound foundation, the Center for Financial Advancement will play a crucial role in ensuring the financial readiness of future generations.”

MBA President and CEO David Stevens, CMB, agreed. “The benefits in this partnership are two-fold,” he said. “African-American students will develop important money management and financial literacy skills, while also having the opportunity to explore a career in the real estate finance field. At the same time, the industry will benefit from an influx of better educated potential homeowners, not mention an influx of diverse new talent into the industry who can bring homeownership opportunities in traditionally underserved communities.”

More than 700 students from all majors on the 40-acre campus will have the opportunity to use the Fisk Center for Financial Advancement.

“The point here is that people from all majors and all skill levels can get into the industry, and this is the industry where money is made,” said Griffin. As an example, she cited a HomeFree-USA intern, whose first job at a mortgage agency paid $80,000 annually–well above the average $50,000 starting salary of college graduates in 2017.

Griffin also noted the Center is not just for students, but also for parents, faculty and the community on HBCU campuses. “Because we are in the real estate and financial services business, anything that we can do for and with the families in terms of buying a home, keeping a home, credit enhancement or anything financial,” she said. “That’s a part of the package.”

For the first year, the Fisk Center will offer a full range of services:

–An annual series of seminars conducted jointly by HomeFree-USA and mortgage banking leaders.

–A curriculum that will include banking and savings basics, mortgage lending, student loan debt, homeownership, credit reports, overall financial capability and “enriching information” about mortgage industry opportunities.

–Students who complete the entire series of seminars will receive a Certificate of Financial Readiness, signed by the leading sponsors.

–Center partners will have access to a pool of interns and potential permanent hires, get CRA credit and branding opportunities.

In 2017, the Fisk CFA has held a “Day of Empowerment,” to introduce students to the Center and its partners. In November, the Fisk CFA held the first of its Money4Life Workshops. The well-attended program was designed to help students build money management skills, manage student loans, provide an understanding on how credit works and lay a foundation for building wealth throughout life.

Griffin envisions the Center as a growing program, which will gradually expand to other HBCU campuses. “Training the next generation of mortgage financiers by HBCUs could be pivotal,” she said. “The need to expand diversity and inclusion in the mortgage industry will be crucial as the face of the typical homebuyer is changing and as the population of America becomes increasingly brown.”

The program could not come at a better time for consumers. Unemployment among Afican-American youth is twice that of white youth, according to the Bureau of Labor Statistics. Former Bennett College president and economist/columnist Julianne Malveaux said gross racial disparities in America’s economic outlook are well-known to economists, who say the wealth gaps will not close without targeted efforts.

“African-Americans still earn just 60 percent of what whites earn,” Malveaux wrote in a recent column. “We have just 7 percent of the wealth that whites have. We have double the unemployment rates. Even with equal incomes, we find it more challenging to get mortgages or other access to capital. And our economic rights are being challenged every day.”

Disparities in homeownership is “the biggest driver of the racial wealth gap,” said a Brandeis University study on the roots of the widening wealth gap (https://iasp.brandeis.edu/pdfs/Author/shapiro-thomas-m/racialwealthgapbrief.pdf). The study also pointed to “toxic inequality” rooted in policies and tax preferences that “favor the affluent.”

The program also comes at a critical time for the mortgage industry. Students need education–and the mortgage industry needs more diversity. According to a 2015 study by STRATMOR Group, Greenwood Village, Colo., just 10 percent of loan officers identified Latino and only 3 percent identified as black or African-American, while 81% self-identified as white.

This flies in the face of studies identifying the Millennial Generation–the first wave of which is entering that critical 26-24 first-time home-buying demographic–as the largest and most diverse cohort in U.S. history. Studies project young people of color will account for four out of every five newly created households over the next decade.

Tamara King, MBA vice president of residential policy and member engagement and staff liaison for the MBA Diversity & Inclusion Committee, said in an industry that strives for longevity, a diverse and inclusive workforce will ensure that the mortgage industry is poised for success for years to come.

“The demographic makeup of the country is changing,” King said. “Nowhere do we see that more than with the Millennial generation, which is approximately 44 percent non-white. If the mortgage industry is going to effectively service this diverse generation, it must depend on a workforce that reflects it.”

Millennials, King said, are more assertive about the need for an inclusive work culture than previous generations, “but all employees want to feel like they are part of a welcoming environment. If you’re going to appeal to the mortgage leaders of the future you have to create an inclusive workplace–today.”

King said diversity is an issue that can no longer be set aside. “There are a lot of tough issues facing the mortgage industry and we need the best minds working together to solve them,” she said. “A diverse workface brings together varied opinions who can see things from different perspectives. When diverse individuals share ideas and best practices, we approach challenges with creative out-of-the-box solutions. In the process, we create a mortgage industry that is stronger and more attuned to our customers’ needs.”

In 2015, MBA Education created Mortgage Banking Bound (https://www.mba.org/conferences-and-education/mba-education/mortgage-banking-bound), designed as an all-inclusive employment assistance and training program for the real estate finance industry.

Targeted to recent college graduates, current students and workers looking to change careers, Introduction to Mortgage Banking consists of five live, online sessions that focus on the foundational concepts of each stage in the residential loan cycle and the jobs that support each stage, including an overview of the residential mortgage industry loan production; loan administration; secondary marketing and regulatory compliance, quality assurance and technology.

The program was an immediate success. Now, MBA Education has customized the program so that it can be used by individual companies, offering three bundle packages that help lenders recruit and hire ideal candidates, train new staff and provide great sponsorship and advertising opportunities to grow business. Currently nearly a half-dozen MBA member companies are involved, including Freedom Mortgage, Prosperity Home Mortgage, Pulte Mortgage, South Pacific Financial Corp. and Cascade Financial Services. MBA Vice President of Education Jeff Schummer said dozens of new hires have resulted from these partnerships.

Additionally, MBA Education hosts a Career Center to post and view potential jobs and gives companies the opportunity to host booths at college campuses. It also sponsors Virtual Career Fairs, an online digital space that connects companies with candidates looking for career opportunities in the mortgage banking industry.