How Loan Officers Can Connect with Underserved Borrower Communities

Lack of access to homeownership is a long-term problem ingrained in American history. Due to systemic factors from discriminatory government practices like redlining to racist practices within home appraisals, many demographics have historically been excluded from the wealth-building benefits of owning a home.

Helping families of color and low to mid-income earners into homes is a vital step in addressing the wealth gap. The data is compelling: According to a 2019 Census Bureau study, homeowners’ median net worth is 80 times renters’ median net worth. Owning a home creates generational wealth and translates to better outcomes for children. Homeownership encourages pride and engagement in communities.

In June, the Department of Housing and Urban Development (HUD) rolled out a new down payment assistance program aimed at increasing Black homeownership. Ideally, this program will help chip away at the disparities in homeownership. Still, truly solving the issue will take concerted effort by the government, financial and nonprofit institutions, and the mortgage industry.

Specifically, loan officers can play an important role in helping underserved demographics achieve homeownership. A link between lending institutions and the communities they serve, LOs hold crucial influence over connecting with prospective borrowers, helping to educate them, and guiding them towards the resources they need.

As a loan officer, you may be thinking, “I’d love to connect with a diverse array of potential borrowers, but it’s not that easy.” You might be considering challenges like borrowers who aren’t in ideal financial positions to qualify for a loan. Maybe you’re simply unsure of how to meet the needs of these communities.

The truth is, every borrower demographic comes with its own set of challenges and opportunities—but that doesn’t mean the effort isn’t worth it. Focusing on underserved communities will become increasingly relevant to lenders in coming years. Black, Hispanic, Asian, and other communities of color are rapidly rising in population across the U.S. In fact, a new study from Urban Institute reports that families of color will be the only group of homeowners to see net growth over the next two decades.

For loan officers, that means populations of color are vital to growing borrower business. Better access to homeownership means better outcomes for the American public at large. But it also means future-proofing your lending business for years to come. Here’s how to start building your pipeline.

Think long-term.

In the race to meet quarterly goals, it’s tempting to focus on short-term wins and solutions. But to build a strong funnel that provides leads reliably through market cycles, long-term strategies are crucial.

As any lending professional knows, helping a borrower get their finances and credit in order to qualify for a loan can take serious time. Depending on the situation, saving for a down payment and building or repairing credit may require three to five years. Many loan officers shy away from the multi-year timeline since they can access homebuyers ready to start the process. Still, creating a funnel that caters to longer timelines both makes business sense and helps to form relationships with borrowers in underserved communities.

“It’s thinking outside the box of how to nurture long-term leads efficiently and have that be a funnel for you that probably won’t pay off in terms of compensation for maybe two years,” says Bryan Traeger, Maxwell’s VP of Customer Success and mortgage industry veteran. “But once that first loan comes through the door, your funnel will begin to take shape, and all of the sudden, you have a loan every six months. If you keep doing these strategies, it will become once a month. And now you’re generating serious business from this. That’s the long-term strategy loan officers need to be thinking about.”

When nurturing these longer-term leads, consider a mix of automation and human interaction. If you connect with borrowers who need 12 or more months of counsel before being ready to take action, place them into your CRM with a plan to connect with them every six months. In the meantime, provide resources, literature, and links that help educate on the lending process and loan options available. Then, use your check-ins to build rapport, assess progress, and answer questions.

By serving as a trusted presence throughout the borrower journey, you’ll make a name for yourself within communities that require expertise and support to overcome significant barriers to homeownership.

Build a scalable lead funnel.

For a long customer timeline to make financial sense, the system needs to be scalable. In other words, if you’re nurturing leads over a year, you need to find ways to work in cohorts of 50 or more. That way, you’ll reap major dividends after a certain period of time—and be able to make more significant changes in the communities you serve.

The strategies you use and funnels you create will be individual to your workflow, company systems, and business goals. Regardless, look to add value and nurture leads by providing resources and information on a reasonable cadence. For underserved demographics, that might look like syncing prospective borrowers up with information that can help them into a better financial position or educating them on down payment assistance and loan options.

Consider partnering with financial planners, CPAs, and other professionals who can help those interested in homeownership overcome credit or budgetary issues. This consultative approach, coupled with regular outreach, will help borrowers make real progress towards qualifying for a loan. Plus, referring leads to trusted partners will create goodwill and send deals back to you over time.

Understand the communities you serve.

Ultimately, there is no exact playbook for connecting with underserved demographics in your market. As with any borrower, families and individuals of color are unique and require situational thinking. It’s up to you as a loan officer to entrench yourself in the community, deeply understand their goals and challenges, and tailor your strategy to fit their needs.

The bottom line is: The “average” American is changing. Our population is becoming dramatically more diverse, and these changing demographics will increasingly force the mortgage industry to pivot tactics to serve non-white borrowers who likely haven’t had the same access to financial education, family wealth, or beneficial government policies and systems. To solve the deep-running issues that have caused homeownership disparity, we all need to think outside the box, and that requires first connecting with the populations striving for homeownership.

“Borrowers trust people who understand their problems and opportunities,” says Bryan. “That’s why it’s important to cultivate a diversified view of the market.”

Spend time with individual borrowers, and attend events that help you interact with a diverse array of populations. Build a network of real estate agents and other professionals who work with underserved demographics. Put effort into understanding and connecting with borrowers of all backgrounds, races, and ethnicities, and you’ll be much better positioned to serve them in years to come.

Download our free ebook “14 Habits of High Performing Loan Officers” to learn tips and tricks for honing your systems and increasing productivity.