Quiero Comprar Una Casa: The Growing Need for Spanish Language Mortgage Lending Documents

First, this community is experiencing a multi-year growth trend. At 58.9 million, the Hispanic population represents a rising share of the U.S. population, equating to 18.1 percent of the overall U.S. population. 

Between 2016 and 2017, the Hispanic population increased by 1.5 million people, accounting for over half of the nation’s population growth. Hispanics are the country’s largest ethnic minority and have accounted for more than half of total U.S. population growth since 2000.

In fact, Hispanics accounted for the majority increase in U.S. homeownership. Over the past decade, Hispanics have accounted for 62.7 percent of net U.S. homeownership gains, growing from 6,303,000 homeowners to 7,877,000, a total increase of 1,574,000 Hispanic homeowners. This upward trajectory for Hispanic homeownership is consistent with projections made by the Urban Institute that Hispanics will account for more than half of all new homeowners over the next several years and for 56 percent of all new homeowners by 2030.

Finally, Hispanics had a higher workforce participation rate than any other ethnic or racial demographic, according to the Bureau of Labor Statistics’ Labor Force Statistics from the current population survey. At 66.3 percent, Hispanics have the highest labor force participation rate of any demographic and are several points ahead of the overall U.S. labor force participation rate of 62.9 percent. This is due in part to the fact that one third of the demographic is comprised of millennials.

How Mortgage Lenders Can Better Serve Hispanics

For mortgage lenders seeking to serve borrowers in this community who may not speak or read English as a first language, being able to provide as many documents as possible in Spanish can make the difference between a successful experience and a frustrated borrower abandoning an application.

Despite the growth we’ve seen in the market, the language barrier remains an obstacle in the further increase of Hispanic homeownership. A report from the Urban Institute suggests that a correlation between limited English proficiency and difficulty achieving home ownership. The study found that neighborhoods with high LEP concentration had homeownership rates 5 percentage points lower than those with a median concentration of LEP residents.

Lenders have a unique opportunity to aid in this growth, but they must choose a document generation engine that can provide documents in Spanish. FHFA, Fannie Mae and Freddie Mac began implementing a multi-year language access plan to address this in 2018. The plan stated three key areas with the goal of providing accurate translations of common industry terminology, creating reliable and easily accessible resources, and ensuring input from experts and advocates. The plan also notes that, while online resources are important, all borrowers also need the ability to speak with someone knowledgeable when questions arise. 

The ability to provide documents in Spanish gives lenders a wider potential customer base and a more inclusive identity. While not every state, investor and regulator has provided approved documents in alternate languages, Docutech has approximately 40 unique Spanish mortgage lending documents, including the Loan Estimate, Closing Disclosure, Uniform Residential Loan Application, and more.

Reducing Non-Compliance Risk

Fair Housing laws are designed to protect consumers and Home Mortgage Disclosure Act reporting reveals which lenders are doing business in communities with a high Hispanic population. While the GSEs decided not to include a question related to preferred language on the new Uniform Residential Loan Application, with millions of US citizens speaking Spanish as their primary language, lenders that choose not to provide Spanish-language support could appear to be limiting housing options.

Some states have gone even further and have enacted laws requiring the translation of certain loan documents into the language of the borrower. This protects consumers by helping them fully understand the terms of the agreements they are entering into. At this time, Arizona, California, the District of Columbia, Oregon, and Texas have various requirements requiring at least some loan documents, be provided in Spanish.

Offering bilingual loan documents is a simple way lenders can contribute to Hispanic homeownership growth and build stronger businesses and Docutech is here to help.