Shalecia Callaway of FICS: Embracing Diversity & Inclusion in Mortgage Lending Strengthens Industry, Builds Profitability
Shalecia Callaway is senior vice president of System Support for FICS (Financial Industry Computer Systems Inc.), a mortgage software company that provides flexible loan origination and mortgage servicing software.
The 2020 Census reflects a country whose population is increasingly diverse, multiracial and breaking down traditional demographic lines. For example, the Hispanic or Latino population grew 23% and the multiracial population experienced a 276% increase between 2010 and 2020.
Diversity, Equity, and Inclusion should be a high priority for mortgage lenders in 2022. At its most basic, DEI refers to building diverse, equitable and inclusive workplaces that reflect the communities lenders serve. DEI is more than creating a welcoming environment and equal opportunities for everyone. Workplace equity and inclusion mean valuing all employees and providing everyone equal access to resources for career growth and promotion to leadership. On the consumer side, fair lending laws mandate that lenders provide “fair and equal access to mortgage services to individuals without discriminating based on gender, age, race, religion, disability, and sexual orientation.”
A lender committed to DEI focuses on building staff, leadership and a customer base that reflect the borrowers it wants to serve. Diverse staff and leadership create an environment where a broader range of ideas can flourish, boosting a company’s bottom line.
Embracing DEI Drives Profitability and Growth
Lenders will struggle to reach their sales and growth goals if they don’t develop a more diverse customer base. Forty four percent of Millennials, the largest generation of homebuyers, are minorities. Lenders must become more diverse and take steps to attract these potential homebuyers and stay competitive.
Minorities are some of the fastest growing economic engines in the U.S. economy. Between 2010 and 2020, the buying power of Asian Americans grew by 111%, with the buying power of other ethnicities also increasing: Hispanics (87%), Native Americans (67%), and African Americans (61%).
Employ a Diverse, Representative Staff
Many borrowers examine their lender’s staff and leaders to determine its diversity. Potential borrowers may feel uncomfortable—and avoid doing business with that lender—if they cannot work with someone who understands them. When a borrower works with a diverse group of helpful people, homeownership may seem more attainable to them. This is especially important for customers who speak other languages. Eliminating language barriers is one important strategy to build a stronger, broader customer base.
To address this, lenders need an employee base that reflects their customer base. To attract more diverse borrowers, lenders should employ a diverse, representative staff. With insights into what people in their communities consider a satisfying home buying experience, these employees can better meet borrower expectations.
Women and people of color are making great advances within the financial services industry. The Bank Administration Institute (BAI), a nonprofit that conducts research and delivers insights for the financial services industry, found in a 2020 survey that 86% of financial services employees reported that they agree or strongly agree that their organization is committed to diversity. Minorities (87%) and females (86%) share this positive opinion.
However, there is still much work to be done. Equal Employment Opportunity Commission (EEOC) data show that across all financial services, white men made up more than half of all executive and senior-level positions in 2018. The next step is to find ways to grow more leaders from diverse employee pools.
Create an Inclusive Community
Borrowers also look for signs of diversity in lending in their own community. Prospective borrowers who don’t know many homeowners who look like them may assume they cannot qualify for a mortgage. By reaching out to consumers in underserved areas, lenders can demonstrate their willingness to serve them. Innovative lenders are embracing new strategies, such as considering untraditional means to evaluate borrowers (e.g., considering rent payments as part of borrowers’ credit histories), to allow more people to achieve the American Dream of home ownership. They are also investing in programs that give every employee equal growth and advancement opportunities.
Use Software to Support and Promote Diversity
Another key finding from the BAI research was that while most financial services organizations are committed to DEI, many organizations are not measuring empirical data tied to DEI efforts. The research also found that while most financial services organizations have DEI goals in place, fewer reported inclusion and equity goals.
Lenders can use technology and data to further their DEI strategies and goals, especially when leveraging Web-based mortgage software. Consumers rely on online resources for information. Today’s software can create documentation in many languages, making it easier for borrowers with limited English proficiency to interpret and understand. Eliminating this language barrier is a vital step in reaching out and effectively serving communities that speak languages other than English.
Technology also enables lenders to help customers feel comfortable with the mortgage process. Today, borrowers from many backgrounds embrace electronic capabilities (e.g., eSign, eClose, and eMortgages). Lenders can send electronic documents to borrowers prior to closing, giving them time to review and share with family members and trusted advisors. Electronic options may alleviate fear of the unknown and get more borrowers to the closing table. Technology also makes it easier to educate borrowers. Lenders can build custom materials that help borrowers from different backgrounds understand the mortgage process and find the best products and rates. Videos, video chat and online help resources explain the complex home buying process.
Lenders can use mortgage software to examine their loan data to find any gaps in their service. HMDA data provides a simple way to benchmark a lender’s performance against peers and look for ways to expand services or eliminate unintentional biases. Lenders can also use underwriting software that removes bias from underwriting decisions by making sure applications are not altered based on a borrower’s demographic characteristics.
Ultimately, everyone benefits in a mortgage industry that embraces DEI. More variety within a company leads to broader knowledge and insight, and a more diverse customer base fosters growth. Lenders should keep in mind that people from different cultures think and see things differently. Considering other perspectives opens more doors and opportunities.
Lenders can recruit well-qualified talent in the workforce and expand their customer base and offerings. At the same time, borrowers gain access to more opportunities when lenders embrace the diverse world in which we live.
(Views expressed in this article do not necessarily reflect policy of the Mortgage Bankers Association, nor do they connote an MBA endorsement of a specific company, product or service. MBA NewsLink welcomes your submissions. Inquiries can be sent to Mike Sorohan, editor, at email@example.com; or Michael Tucker, editorial manager, at firstname.lastname@example.org.)