It’s a story that’s repeated with regular frequency in some real estate circles: “I helped my parents buy their first home because I translated everything when I was 12 years old.” According to Gary Acosta, chairman and founder of the San Diego-based National Association of Hispanic Real Estate Professionals (NAHREP), such occurrences are prevalent in California communities where bilingual children translate for their parents when the older generation purchases their first homes. “We probably have more homes sold by 12-year-olds in the state of California than anywhere else in the country,” Acosta quips.

Yet the language barrier is just one aspect that complicates the homebuying process for the state’s Latino population, a population whose home-purchasing power is expected to increase in coming years. According to projections from the California Department of Finance, the state’s Hispanic population will grow from more than 12.7 million in 2004 to nearly 18.9 million in 2020. As a result, Hispanics are expected to constitute the largest ethnic group in the state at 43 percent of the population, followed by whites at 33.7 percent, Asian/Pacific Americans at 13.1 percent, African-Americans at 6.7 percent, and all other groups at 3.5 percent. Yet as of 2000, the homeownership rate for Hispanics in California was just 43.7 percent versus 64.9 percent for white households, 55.4 percent for Asians, and 38.8 percent for African-Americans, according to the 2000 U.S. Census.

Of Credit, Culture & Counseling
When it comes to working with Latino clients, REALTORS® should understand that differences in the transaction stem from cultural issues as much as language barriers, note those interviewed for this article. Acosta explains, “Latino buyers tend to be part of very close-knit families, so it’s not uncommon for multigenerational families to be living together, especially in California where affordability is so challenging. It’s not surprising to see multiple families pooling resources to buy a home.”

As a result, lenders and REALTORS® often opt for nontraditional finance methods to help their Latino clients get onto the homeownership ladder. Zeeda Daniele, senior deputy director of Fannie Mae’s Los Angeles Partnership Office, explains that Fannie Mae is working with lenders to offer an “extended family mortgage that makes it easier for relatives to become co-borrowers for another family member without having to occupy the home.

“With the help of our lending, nonprofit, for-profit, and community partners, we’re involved in a number of programs designed to address homeownership needs within the Latino community,” Daniele says.

According to Daniele, Fannie has partnered with lenders and both for-profit and non-profit organizations to provide everything from homebuying information on Univision.com’s “Casa” channel to extended-family mortgages that enable non-occupants to act as co-borrowers for a home. Among the initiatives Fannie participates in is Tu Casa con Hermandad, a Los Angeles-area partnership with Hermandad Mexicana Latinoamerica (www.hermandadmexicana.com) that seeks to boost Latino homeownership levels to the non-Latino national rate of 65 percent.

In the Central Valley, Fannie Mae has teamed with the Rural Community Assistance Corp. (RCAC) to develop affordable housing in the region. Daniele says Fannie has committed to providing a “$4 million revolving line of credit to RCAC’s loan fund to help developers finance the land acquisition and construction of affordable housing.” In the San Francisco Bay Area, Fannie Mae has worked with “the cities and counties of Fremont, San Jose, San Francisco, San Mateo, Richmond and Oakland to help finance their local assistance programs for first-time homebuyers.” The San Jose program, called Home Venture Fund Down Payment Assistance Program, for instance, offers downpayment assistance on second loans ranging from $5,000 to $80,000. For qualifying borrowers, loans are deferred for five years at zero percent interest, then increase to 6.5 percent thereafter.

Freddie Mac, too, has developed initiatives to increase homeownership among Latino households, including a venture with C.A.R. to target California buyers. According to Patti Boerger, public relations manager at Freddie Mac, C.A.R. and Freddie Mac recently teamed with Chase Home Finance, NAHREP, the League of United Latin American Citizens (LULAC), and the California Housing Finance Agency to help REALTORS® reach and better serve Latino clients while also helping Latinos learn about homebuyer assistance programs. As part of the initiative, Freddie Mac and Chase Home Finance developed a course entitled “Effectively Serving the Latino Homebuyer” that qualifies for continuing-education credit.

Freddie Mac’s initiatives also include homebuyer-education programs, including its multi-state “Don’t Borrow Trouble” campaign to educate potential buyers about predatory lending and, in conjunction with the National Association of Mortgage Brokers (NAMB), its CreditSmart® and CreditSmart Español® financial literacy programs. Freddie Mac also has partnered with a number of non-profit and for-profit organizations to increase homeownership in specific California communities. In San Francisco, for example, Freddie Mac teamed with the ABAG Finance Authority for Nonprofit Corporations to launch California Home Source, a $48 million lease-purchase homeownership initiative. In Los Angeles, the secondary mortgage company partnered with Watts Century Latino Organization, the National Council of La Raza, Wells Fargo Home Mortgage, Bank of America and U.S. Bank to offer En Su Casa, an initiative that seeks to provide homebuyer education, new technology tools and flexible mortgage products to underserved communities.

In addition, cultural attitudes about debt, credit and financing factor into the home-purchase process. Sylvia Butler, a REALTOR® with CENTURY 21 Butler Realty in Santa Barbara, explains that some Latino communities believe good credit is achieved by not having debt, by not using credit cards, and by paying cash for major purchases like cars. “A lot of Mexican people think good credit is to owe nothing, especially the grandmas and grandpas. I tell them, ‘You have to put money in the bank.’” Robin Turner, a REALTOR® with RE/MAX Gold Coast REALTORS® in Oxnard and chair of her local association’s Equal Opportunity and Cultural Diversity committee, says that she and the lenders she works with help explain the importance of establishing a credit history to her Latino clients. “Many Latinos are very capable of saving money, but not all the money may be documented at a traditional bank. So, they might have the amount of money it takes to purchase, but it may not be seasoned, and that has caused some problems for lenders in the past.”

Acosta elaborates that due to the volume of automated and electronic underwriting that occurs in today’s market, it’s even more critical for buyers to establish credit histories. “If you don’t have traditional credit and FICO scores, it can be very difficult to qualify for the best loans in the marketplace.” Turner also notes that in her market area, some members of the Latino community are undocumented workers. As a consequence, despite having worked in the Ventura area and contributed to its economy, those individuals are locked out of the homeownership cycle. “They’ve worked in the U.S. with correct papers, but when it comes down to actually purchasing, they may not have that valid paper. It’s important for them to obtain the necessary paperwork to purchase a home.”

As a consequence, Turner says, REALTORS®, lenders and other industry professionals in the Ventura community are stepping up efforts to educate could-be homeowners about documentation requirements and procedures. “Our big concern right now is making sure that when they do purchase, they purchase the legal way so nothing will happen in the future. We work with individuals to make sure they become legalized so they have the necessary paperwork. That may mean that the borrower comes into the office today, but it might take six months to a year to actually be able to purchase,” she says. Finally, a general lack of understanding about the home-buying process exacerbates the challenge for Latino consumers. For example, Daniele says, “Many Latinos still believe they need near-perfect credit or a 20 percent (downpayment) to buy a home.” Acosta believes that increasing the availability of information about the process–whether through counseling, seminars, or online resources–“is of critical importance. The entire industry has a role to play in that.”

Reaching Out
To reach out to the Latino community in the Santa Barbara area, Butler hosts a weekly radio show over the weekend. “I do a lot of explanations: What do they have to do to buy a house? What are the right questions to ask?” Butler shares. She also encourages Latino consumers to find a Spanish-speaking REALTOR® to help with the transaction. “Even if they’ve been here a long time or the kids speak English and Spanish, the parents or grandparents still want to know what’s going on in Spanish,” she explains.

Meanwhile, the Ventura County Coastal Association is trying to increase general awareness and understanding of the home-buying process among Latino consumers. Turner says that in June, the Association will host its fourth annual homeownership expo. Produced in conjunction with area lenders, title and escrow companies, city housing agencies, termite companies, insurance providers and home warranty companies, the expo offers homebuyer education seminars in both English and Spanish. “We have broken it down so the homebuying process is in one room and you can go to individuals within this room to obtain literature. We break it down even more and hold classes with professionals who help Latino individuals understand the overall process in reference to purchasing.” In the northern end of the state, Ben Beesley, a REALTOR® with Keller Williams Realty in Carmel, teaches homebuyer education classes in conjunction with the Monterey County Housing Alliance (MoCHA). The classes are part of a program developed by MoCHA and the Community Housing Improvement Planning Association to help very low-, low- and moderate-income individuals qualify for housing. Although the program doesn’t target the Latino community directly, Beesley explains that due to the demographics in Salinas Valley, a “greater proportion of candidates for the program” tend to be Latino.

The Language Barrier
Although a growing number of Latino consumers speak English, REALTORS® note that some first-generation immigrants and older buyers prefer conducting transactions in Spanish, the language with which they’re most comfortable. As a result, savvy REALTORS® are learning Spanish themselves, teaming with Spanish-speaking lenders or other agents, or urging their clients to use a trusted translator. Beesley, for example, says he uses a Spanish-English CD-ROM offered by First American Title and a Spanish-English real estate glossary from Stewart Title as resources to help communicate with his clients who speak Spanish. “If I don’t understand something, I can give the glossary to them and they can say, ‘history of title’ or ‘what is title?’” Beesley says. He notes, however, that simple translations don’t always suffice: some concepts that are commonplace in America don’t necessarily have counterparts in other regions of the world. “Historically, the grandmother may remember where the boundary of the property was, not the title company,” Beesley says.

Despite the move to incorporate bilingual resources in the transaction, language barriers still arise when it comes to the documentation required to sell or purchase a home. “Many Latinos will prefer to have a lot of information in Spanish,” says Turner. “However, most forms are in English. You need someone educated enough to be able to translate contracts so they’ll be able to understand the legalities of what the contract is saying.” It’s a point that Acosta echoes, noting, “How fair or how smart is it to have your clients sign contracts in a language they do not understand? I understand it’s a complicated issue. It’s not like translating collateral material into Spanish so it’s there for reference. We’re talking about contractual, binding documentation.” As of 2004, California law requires that REALTORS® who negotiate loan, lease, or rental transactions primarily in Spanish, Chinese, Tagalog, Vietnamese, or Korean provide a translation of the loan, lease, or rental agreement in the language in which the negotiations occurred (see Section 1632 of the California Civil Code for more details).

To address this challenge, Ernest Villafranca, a REALTOR® with the Grand Lake office of Prudential California Realty in Oakland and vice president of education for NAHREP’s Alameda County chapter, says he is careful to explain the key concepts of the forms his clients sign. “I try to explain the big points and to explain they are protected if they’re homebuyers–they’re protected by the following clauses in the contract. ‘Buyers have these rights, this is what you can expect from this transaction, this is how you’re protected,’” he says. To help REALTORS® who work with clients who speak a language other than English, C.A.R. provides its “Buyer’s and Seller’s Guide to the RPA-CA” in English-Chinese, English-Korean, English-Spanish, Tagalog-English and Vietnamese-English versions.

Breaking Into the Latino Market
As more REALTORS® begin to look to the Latino community as a niche market, they may find that traditional ways of finding clients–newspaper ads, for-sale signs, local cable or radio shows, and so forth–don’t garner similar results. Acosta recommends that REALTORS® understand the dynamics of the particular community they’re trying to target; in particular, they need to identify those people Acosta explains are considered the community’s “trusted advisors.” “You can put the biggest billboard in front of someone’s home, but they’re going to respond more to what their neighbor says than they will to what they read in an advertisement,” Acosta says. “You need to find out who the trusted advisors are in the community–church leaders, tax preparers, teachers. Whoever the people are in that community who have the trusted advisor role is a good place to start in terms of developing relationships and using those relationships to leverage business opportunities.”

Butler echoes this point, noting that word-of-mouth referrals may be the best way for REALTORS® to increase their Latino client base. “The Spanish community is very loyal: when you are their agent, you are the agent of all their friends, and all their family. I’ve been in business for so long, I sell to the children of children of children of referrals.” The bottom line, Acosta says, is the trust factor between REALTORS® and their clients. “Latinos are not necessarily always looking for the best price or the most recognizable brand; they’re looking to do business with someone they can trust. The best spinoff of that is if you have a good experience with somebody, you’re going to tell everybody you know about that experience, so opportunities for repeat business and referral business are enormous in the Latino community.”

Daniele recommends REALTORS® continue with trends that have picked up in recent years: learning conversational Spanish as well as about the needs of diverse communities. However, she encourages REALTORS®’ training efforts to go a step further, by enrolling in training “to understand the diversity of cultures within the Latino heritage,” she explains. “Whether people are from Mexico, the Dominican Republic, or Cuba, there are cultural things that make them distinct. Understanding those things is very important. For example, there’s a growing Mayan population in San Francisco; this is a Spanish-speaking culture with a different dialect and different needs.”

Villafranca believes that in general, the real estate industry needs to make itself more visible within the Latino community. “Latino consumers need to see more representation, whether in home inspections, title companies, or lenders. We as an industry need to say we’re here for the Latino market. We need to be more visible and as members of NAHREP, C.A.R. or local REALTOR® associations, say, ‘We’re here, we can help if you have any real estate questions.’” Toni Panetta is a freelance writer based in Littleton, Colo.

By Toni Panetta