Hispanic Resource Center

News Updates...

(updated December, 2008)

CUs more likely to approve mortgage applications

Minorities and low- to moderate-income consumers shopping for a mortgage better check out credit unions, according to 2007 Home Mortgage Disclosure Act (HMDA) data.

HMDA data says credit unions are much more likely than other lenders to approve mortgage loan applications.

If there is a silver lining in the higher denial rates blacks and Hispanics saw between 2006 and 2007, it’s that credit unions are more likely to grant minority groups a mortgage than other providers. Mike Schenk, CUNA’s senior economist, says HMDA data on denial and approval rates by race and income levels suggest credit unions have a higher approval rate than other lenders. For example, African- Americans seeking a mortgage loan are 17% more likely to get a loan at a credit union than at any other financial institution.

The credit union approval rate for nonwhites was nearly 58% compared to about 51% for other financial institutions. Similarly, credit union denial rates for nonwhites was 22% at credit unions compared with 35% at other institutions.

The credit union approval rate for Hispanics was nearly 61%--almost 10 percentage points higher than other mortgage lenders.

In looking at low- to moderate-income borrowers, the denial rate at credit unions was 20% compared with nearly 33% at other lenders, HMDA data shows. The approval rate for this group was nearly 67% at credit unions and only 52% at other lenders. Schenk estimates that one quarter of all credit union mortgage loan approvals went to members with low- to moderate-income levels.

The Federal Reserve Board’s HMDA report shows mortgage applications fell 22% last year with mortgage approvals falling 25% and subprime loans fell 36%. Of the 8,610 institutions included in the study, more than 2,000 were credit unions.

Fewer undocumented immigrants coming to U.S.

Hispanics account for more than half of the overall population growth in this decade in the United States, and new data suggest the inflow of undocumented immigrants is growing at a slower rate than the inflow of documented immigrants.

That’s the new data coming from the Pew Hispanic Center. Since 2000, Hispanics have accounted for more than half (50.5%) of the overall population growth in the United States--a significant new demographic milestone for the nation's largest minority group. During the 1990s, the Hispanic population also expanded rapidly, but in that decade its growth accounted for less than 40% of the nation's total population increase. In a reversal of past trends, Latino population growth in the new century has been more a product of the natural increase (births minus deaths) of the existing population than it has been of new international migration. As of mid-2007, Hispanics accounted for 15.1% of the total U.S. population.

The unauthorized immigrant population grew more slowly from 2005 to 2008 than it did earlier in the decade. The inflow of immigrants who are undocumented has now fallen below that of immigrants who are legal permanent residents, reversing a trend that began a decade ago.

Pew also reports that the median annual income of non-citizen immigrant households--a group that accounts for 7% of all U.S. households and 52% of all immigrant households--fell 7.3% from 2006 to 2007. In contrast, the median annual income of all U.S. households increased 1.3% during the same period.

A closer look at the Hispanic market from Experian

Everyone knows the Hispanic market in the U.S. has grown, but it is important to examine where that growth has come, according to ExperianConsumerResearch.com.

The adult Hispanic market has grown 20% over the past four years, and the fastest growing segments are in the young adult category (ages18 to 34) and in the older market segment (ages 45 to 54.)

Experian says Hispanics are becoming more comfortable using credit cards. Within a 30 day period, more than a quarter of the Hispanic population used a credit card one to five times, Experian says. That could mean this market is working to establish credit or it could also suggest increased credit card usage because of financial stress.

The percentage of Hispanics who say they don’t like being in debt has decreased over the past four years, Experian says. At the same time, Hispanics are less likely to pay for things with cash. While many Hispanics told Experian that they felt more financially secure, their self- reported lack of financial sophistication has also increased since Experian did a similar survey in the spring of 2004.

Experian says Hispanics have become more likely to pay more for environmentally friendly products and to plan ahead for expensive purchases.

Bankruptcies are on the rise

The number of personal bankruptcy filings jumped nearly 8% in October from September. Bankruptcy has been climbing steadily for the past two years.

Filings totaled 108,595--surpassing 100,000 for the first time since bankruptcy reform. Bankruptcy filings increased nearly 34% from the prior year, says Automated Access to Court Electronic Records, a bankruptcy data and management company.

Job loss, tighter credit, and the subprime mortgage meltdown play significant roles in the increase. The 2007 Consumer Bankruptcy Project found that the typical family that filed for bankruptcy in 2007 carried about 21% more debt than nonfilers from sources like mortgages and car loans and about 44% more in unsecured debt like credit cards, medical, and utility bills than in 2001.

Filings increased most in states where real estate values have plummeted—California, up 80% from last year; Florida, up 62%; and Nevada, up 70%. But bankruptcies are also on the rise in states where job losses have been climbing, places like Rhode Island, Delaware, and Indiana.

News Briefs

• Hispanics gave birth to one of every five babies in the state of Washington. The combination of high Hispanic birth rates, high immigration, and lower birth rates among whites has led to projections that nonwhites will be a majority population by the year 2050…
• Half (50%) of all Latinos say that the situation of Latinos in this country is worse now than it was a year ago, according to a new nationwide survey of 2,015 Hispanic adults conducted by the Pew Hispanic Center. This pessimism is especially prevalent among immigrants, who account for 54% of all Hispanic adults in the United States. Fully 63% of these Latino immigrants say that the situation of Latinos has worsened over the past year. In 2007, just 42% of all adult Hispanic immigrants--and just 33% of all Hispanic adults--said the same thing…
• According to a report in the Arizona Republic newspaper, a report at the National Association of Hispanic Real Estate Professionals meeting in September, in Phoenix, FHA Commissioner Brian Montgomery talked about how Latinos are highly vulnerable to foreclosure, with 47% of home buyers in this ethnic group obtaining subprime mortgages two years ago vs. 18% of non-Hispanic whites. Housing Finance Board Chairman Ronald Rosenfeld, meanwhile, encouraged real estate professionals to focus on financial literacy and to assist struggling homeowners. According to Montgomery, the federal housing bill passed this summer will establish a pilot program to develop databases that take into consideration timely rent and utility payments…

(updated July, 2008)

NFCC/MSN Money survey suggests Latinos struggling with finances

Nearly three of 10 Latino families say they are having trouble paying their bills each month, says the National Foundation for Credit Counseling and MSN Money 2008 Financial Literacy Survey.

That translates into about 6.6 million Latinos who sometime skip a monthly payment, have accounts in collections, or are seriously considering filing a petition for bankruptcy.

Housing costs comprise the largest single monthly expense, with 1.7 million Hispanics saying they either paid their mortgage late or totally missed a payment in the past 12 months.

Just as alarming, the survey suggests more than half the Hispanic families surveyed have no savings beyond what is earmarked for retirement and a third of those individuals have no retirement savings at all.

Latinos are particularly underserved when it comes to insurance. More than one-third have no medical coverage, nearly six of 10 have no homeowners insurance, and more than eight of 10 have no renters insurance.

Recession forcing some Hispanics to tap retirement accounts

Today’s recession is forcing many middle-aged and older Hispanics to tap into their retirement savings to solve immediate financial problems, according to a new survey from AARP.

While two-thirds of Americans age 45 and older are having a hard time paying for food, gas, and medicine, the number soars to 80% among Hispanics age 45 and older, AARP says. Middle aged Hispanics are more likely than the general population to pay their mortgages, rent, or educational expenses, according to AARP.

Middle-aged and older Hispanics are more likely than the general 45+ population to have difficulty paying their mortgage or rent (41% - 26%), as well as paying for educational expenses (32% - 19%).

The impact of high foreclosure rates is causing particular stress for Hispanics 45 and older, with more than four of 10 (41%) concerned about losing their home, and more than three-quarters (77%) concerned about the safety of neighborhoods with many foreclosed homes.

Economic pressures are forcing many middle-aged and older Hispanics to make difficult choices that could have dire long-term consequences.

One-third (33%) stopped putting money into a 401(k), IRA, or other retirement account, and more than one-quarter (26%) are prematurely raiding these nest egg accounts. More than three of 10 (31%) have postponed paying some bills, and more than one out of every five (22%) middle-aged and older Hispanics are cutting back on their medications.

Many middle-aged and older Hispanics are responding to the economy by staying on the job longer, both in the short- and long-terms. More than a quarter (26%) say the economic slump has forced them to postpone retirement plans, and almost as many (23%) have increased the number of hours they work in the meantime.

In the face of these hard times, many Hispanic families and their communities are pulling together for support. In the last year, 44% of respondents helped a child pay bills or expenses and almost one-fifth (18%) did the same for their parents. More than one of 10 (14%) let a child move in for financial reasons and 5% did the same for their parents. One out of every ten (10%) had to seek help from loved ones, churches, or local charities.

AARP commissioned the survey, titled "The Economic Slowdown's Impact on Middle-Aged and Older Hispanics." The national telephone survey of 400 people ages 45 and older, was conducted April 12 - 23, 2008 by Woelfel Research Inc.

For more information or to view the complete survey, visit: http://www.aarp.org/research/economy/trends/economy_survey.html.

Are community banks targeting Hispanics?

According to a 2008 ICBA Community Bank Survey on emerging markets, nearly half of community banks are making efforts to serve Hispanic consumers.

Among community banks that are actively seeking to serve the Hispanic market, only a few say they are “very successful” in reaching this growing demographic. About half of outreach community banks offer core products and services like CDs, mortgages, consumer loans, and business loans with enhancements like multilingual account materials, online and telephone banking, or ATM services in another language.

Only 40% of the community credit unions that have Latino outreach programs offer remittance services, noncustomer check cashing, or prepaid cards to this market. Community banks say they focus on financial literacy programs and bilingual staff and bilingual services to attract new immigrants.

Not unlike credit unions, banks that are targeting Hispanics say they want a better understanding of the financial needs of underserved consumers. Among community banks that do not have Latino outreach services, concern about profitability and the local market demographics account for their decisions not to go forward with an outreach program.

While most community banks are targeting Latinos, some also are developing programs to serve Hmong people of Southeast Asia or Bosnian populations displaced from Eastern Europe.

When asked what type of identification community banks are choosing to accept, community banks most often are asking for drivers’ licenses (54%), ITIN numbers (47%), foreign passports (39%), Matricula Consular cards (19%). Half the respondents said they had bilingual staff members.

In all, 340 community banks responded to the survey.

Mortgage meltdown affects Hispanics

The first three months of 2008 marked the worst quarter for American homeowners in nearly three decades. The rate of new foreclosures and past-due payments surged to their highest level since 1979, when the Mortgage Bankers Association first started collecting data.

All told, about 8.8% of home loans were past due or in foreclosure, or about 4.8 million loans. That is up from 7.9% at the end of December. (About a third of American homeowners do not have mortgages.)

Delinquency and foreclosure rates started rising from historically low levels in late 2006 and have picked up speed in nearly every quarter since. Analysts say at first past due mortgages represented mostly high-risk loans made to borrowers with blemished, or subprime, credit and that many of those borrowers were Hispanic.

Now, as the economy has weakened and home prices have fallen in many parts of the country, homeowners with better loans also are falling behind. California and Florida, for instance, accounted for nearly a third of all mortgages that were in foreclosure or 90 days delinquent.

Short takes…

• Are you missing an opportunity to promote wealth management services to Hispanics? While many banking companies have active plans that target women, professional association groups, and some minority groups, there are few programs that target Hispanics. Nearly 12% of the 22 million Hispanics with banking relationships have incomes of $50,000 or more. Target those groups for retirement, college, and estate planning …
• The Tomas Rivera Policy Institute says an affluent Latino middle class is growing at a rapid pace. This group estimates 37% of Hispanic households nationwide have household incomes exceeding $50,000 and 10% have household incomes exceeding $100,000 …
• Does your credit union help Hispanics tap into earned income tax credits? Data suggest that free income tax preparation to low-income consumers would help many file for earned income tax credit refunds …
• A growing number of consumers are being duped by scams that pretend to protect homeowners from foreclosure. In one such scam, a San Diego group promised to prevent foreclosures—for an upfront fee of $10,000 and signing the title of the property over to companies the thieves controlled. Over 400 property owners were bilked …
• The National Council of La Raza (NCLR) and Sodexo have announced the release of “Hispanic Employee Affinity and Network Groups Resource Guide: Making the Connection in Corporate America …
• Hispanic purchasing power, which currently represents 8.6% of the entire U.S. purchasing power will reach 12% by 2015, according to Hispantelligence estimates …
• Hispanics now account for more than 15% of the total U.S. population, with the bulk of the increase coming from births rather than immigration, says the U.S. Census Bureau …
• Hispanic median family income declined by an average of 0.5% per year from 2000 to 2006, after rising an average of 1.5% per year during the 1990s. The percent of Hispanics living in poverty increased slightly from 2000 to 2006. In 2006, only 8.2% of whites lived in poverty compared to 20.6% of Hispanics …
• You’ll have to do a lot more than translate your services into Spanish if you want to reach the Latino market says a report: Innovative Approaches to the Hispanic Retail Banking Market …
• In a survey of 3,513 online Hispanic consumers that comScore.com conducted, Internet use is now outpacing television use. Internet use now outpaces television with 56% reporting they spend at least one hour per day online vs. 50% that reported spending one hour per day watching television. And 72% said they have computers and televisions in the same room and 75% of these multitask using the Internet and television together always or very frequently …

(updated January, 2008)

Minorities hit hardest in subprime market

The subprime mortgage crisis will cost blacks and Hispanics up to $256 billion, says a study from United for a Fair Economy, a Boston nonprofit awareness group.

Hispanics could lose from $75 billion to $129 billion, the study claims. According to the study, which cited government mortgage data, nearly 33% of Hispanics who bought homes in Boston or five other major cities in recent years had high-priced mortgage loans.

In fact, 41% of blacks had high priced mortgage loans, compared with 7% of whites, the study said.

According to the study, affluent buyers were not spared problems with subprime mortgages: 54% of blacks, 49% of Hispanics, and 16% of upper income whites took out high-cost loans. The study “Foreclosed: The State of the Dream 2008” calls the current mortgage crisis the “greatest loss of wealth for communities and individuals of color in modern U.S. history.”

Citizens hope to launch Latino CU in Georgia

Following a model similar to the Latino Community Credit Union in Durham, N.C., organizers in Georgia are hoping to launch a credit union specifically targeting Latinos.

Georgia Family Credit Union is the proposed name of the credit union and organizers are hoping to get the green light from regulators to begin operations later this year. The Latino community in Atlanta has reached the size where it can support a credit union offering a bilingual and bicultural staff, according to Paola Diaz-Torres.

Diaz-Torres and her supporters reportedly have $700,000 in seed money but need more seed money from community supporters. Organizers are focusing on a market of low-income, Latinos and other multicultural populations in the area, hoping to sign up 1,500 members over the initial three- year period.

The new credit union plans to compete with payday lenders and check-cashing outlets, reports the Atlanta Journal Constitution. To do so, it will focus on educating Hispanics about opening checking accounts, establishing credit, and budgeting.

WOCCU launches CUROP pilot program

Consumers sent more than $267 billion money transfers in 2006. And remittances to Latin American and the Caribbean alone accounted for $61 billion, nearly one-quarter of the transfers.

As a result of that market potential, the World Council of Credit Unions (WOCCU) has launched the Credit Union Remittance Outreach Program (CUROP).

CUROP is designed to encourage U.S. credit unions to reach out to underserved populations by offering international remittances. CUROP offers participating credit unions the standard VIGO product through WOCCU’s International Remittance program as well as extensive technical assistance to help improve membership growth and deposit growth potential. The program will focus on remittance-sending individuals.

The program builds on WOCCU’s International Partnership Program and the existing partnership between the Iowa Credit Union League (ICUL) and the Corporación Fondo de Estabilización y Garantía de Cooperativas de Ahorro y Crédito de Panamá (COFEP, WOCCU’s member in Panama) and will be implemented with the ICUL’s subsidiary, Coopera Consulting.

The pilot program will help participating credit unions build Hispanic membership by offering international remittances and other services. For example, CUROP will provide the pilot credit unions with help in marketing, community outreach, staff training, and financial education. The three pilot program credit unions represent these three asset categories: $1-25 million, $25-100 million, and $100 million and above.

For more information, contact Megan Webster, mwebster@woccu.org; 608-395-2073

CU executive launches Hispanic business development group

A credit union vice president is heading up the public launch of an organization designed to bring more Hispanics into leadership roles in California.

A substantial Hispanic community exists, but does not have a voice in regional business affairs, said Maurice Calderon, vice president for minority development at the $1.1 billion asset, San Bernardino-based Arrowhead Credit Union.

The Empire Hispanic Leadership Council began meeting in May and is ready to begin operations to influence discussions of economic, education, health, and transportation issues and to help mold policy (The Press Enterprise Jan. 16).

The council—having already helped organize business expos and workshops—also will develop and maintain a database of Latino-owned businesses in the region.

San Bernardino and Riverside counties have a 44% Hispanic population, according to 2006 U.S. Census estimates—up from 38% in 2000. Despite being a significant segment of the population, few Latino's are part of influential business and civic groups, Calderon said.

The problem has been that leaders of business and civic groups tend to select people who most look like them, Calderon said, adding that not enough Latinos have attempted to get involved.

Latino Community CU launches online service

Latino DirectNet, a new online service provided by Latino Community CU, was introduced to members Tuesday.

Latino DirectNet allows members to access most of the $50.8 million asset, Durham-based credit union's products and services.

"With this service, available in English and Spanish, members will be able to manage their accounts and carry out many types of transactions from home," said Angel Romero, Latino Community marketing director. "Members will no longer need to go to branches, use the phone, or go to an ATM. They will be able to do it all from their computers—from any place that has an Internet connection."

Transactions at Latino DirectNet are protected by physical, electronic, and procedural measures, the credit union said.

A highlight of the new bilingual system is the possibility of making investments online. "For example, members will be able to open share term certificates to enjoy Latino Community's dividend rates," Romero explained. "Another feature of Latino DirectNet is that it allows users to transfer money between accounts. Users can pay credit cards and loans as well.

"Also, members will be able to pay utility bills and other services with BillPay. Through the BillPay system, credit union members will be able to schedule one-time or recurrent payments," he added.

A glimpse at U.S. incomes by race and ethnicity

Short takes

• With nearly 25% of the San Francisco bay area’s population being Hispanic, it’s no wonder Patelco CU is running an eight-week marketing blitz—using radio, point of sale, collateral, and events marketing efforts--to tap the area’s Hispanic population. The $4 billion credit union is promoting membership and its new remittance program that has no fees provided the user is a Patelco member with a savings or checking account (CU Journal, Dec. 3) …
• The Dallas-Fort Worth chapter of the Financial Planning Association has received a $40,000 grant from the Certified Financial Planner Board of Standards to produce a financial literacy DVD for Hispanics that will be distributed at major Latino functions, locations, or groups. The free DVD, which will be in Spanish and English, also will be featured on public radio and television. (The Dallas Morning News) …
• The remittance market still is dominated by money transfer companies such as Western Union, but credit unions and banks have entered the market and the growing competition has lowered money transfer fees substantially. Such fees still average almost 6%--about $11 on a $200 transfer. Credit unions and banks still only handle about 10% of transfers says SFGate.com …
• The Pew Research’s “2007 National Survey of Latinos: As Illegal Immigration Issue Heats Up, Hispanics Feel a Chill,” report says more Hispanics are worried about immigration reform. While the political environment is a growing concern for Hispanics, Wall Street is embracing the market as a growing economic force that businesses, advertisers, and investors should embrace. That’s the view from Goldman Sachs which has updated its 2004 report on “U.S. ‘Hispanization’” and suggests that half the nation’s population growth between now and 2010 will be Latinos. Overall, Hispanics will represent 20% of the population by 2030. The study suggests this market spends less than non-Latinos on insurance, pensions, entertainment, and health care …
• Latino Community Credit Union, Durham, N.C., is branching out—this time with additional branch offices in Charlotte and Wake County. The $55 million asset credit union has 51,000 members. The credit union recently received a grant of $500,000 and a $5 million low-interest-rate investment loan that it will use to provide loans to low-income households …
• Bucking the trend in many other wealthy industrialized nations, the United States seems to be experiencing a baby boomlet, reporting the largest number of children born in 45 years. The nearly 4.3 million births in 2006 were mostly due to a bigger population, especially a growing number of Hispanics. That group accounted for nearly one-quarter of all U.S. births. But non-Hispanic white women and other racial and ethnic groups were having more babies, too. There are cultural reasons as well. Hispanics as a group have higher fertility rates--about 40% higher than the U.S. overall …

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