NOTE: This story is part of a package on mortgages, race and database journalism. Read the lead story in the package here.
Every Friday afternoon, Realtor Julia Valenciana spends part of her workday in the studio of La Zeta, 95.7-FM, a Spanish-speaking station in Springdale, telling the Hispanic community how to buy a home and avoid being rejected by the system.
“First-generation Hispanics don’t know how to work their credit,” she says. “They are from Mexico where you have to pay cash for everything.”
Valenciana, 46, has worked for real estate brokerage RE/MAX for 16 years — expertise that is valuable to the Hispanic community in Northwest Arkansas where in 2015 about 25 percent were denied home mortgages, most because of credit issues, according to federal Home Mortgage Disclosure Act data.
Students at the Walter J. Lemke Department of Journalism at the University of Arkansas analyzed the home lending data, which banks report to federal banking regulators every year.
For Hispanics and all races, poor credit history was a common reason applicants were denied loans.
Lemke students interviewed multiple experts in the home mortgage industry who offered tips on how to avoid loan denials, how to navigate the complex home mortgage process and ways to build up credit.
BIG LOANS START WITH SMALL ONES
Johneese Adams, an Arvest mortgage lender in Fayetteville, suggests building credit by getting a credit card and using it for small purchases. Valencia also recommends this to her community but with a word of warning — credit cards are also a very easy, very expensive way to accrue debt.
Susan Lipscomb, a sales manager for Wells Fargo in Rogers, says applicants can build a credit history simply by consistently and punctually paying their car insurance, rent or cell phone bills.
YOUR GOVERNMENT’S HERE TO HELP
Bill Robertson, director of operations at Credit Counseling of Arkansas, says some buyers are unaware of programs through agencies such as the Arkansas Development Finance Authority meant to assist home buyers with the mortgage process.
What’s more, potential homeowners looking in an area with a population of 25,000 or less qualify for a Rural Development loan.
This program offers 100 percent financing.
MAKE A PLAN
Adams suggests borrowers should work with Credit Counseling of Arkansas to develop a financial plan and build toward it.
“I’ve met with people a year or two before and said, ‘OK, here’s the plan. Here’s how we’re going to fix it,’” he says.
When they follow such a plan, “they got their credit score up, and they’ve got a good history, and we’re off and running getting them a home loan.
BEWARE PREDATORS BEARING PAPERS
Mary Sanchez, an advisor for Credit Counseling of Arkansas, warns that non-native members of the community face predatory lending schemes that target non-English speaking people.
“When it comes to reading a contract that’s 30 pages long … [it’s] complicated language as it is. For a non-native English speaker it becomes even more difficult.”