Published on Monday, March 18, 2002

A Dream Within Reach

(photo)BRIAN FITZGERALD/Yakima Herald-Republic


Nestor Hernandez, a real estate agent with Salsgivers Inc. Realtors of Yakima, shows a large home to prospective home buyer Maria Acevedo. Acevedo and her husband made an offer on what would be their first home, but would be unable to move in until extensive repair is done to the inside of the two-story structure.








Carmen Sandoval never doubted she'd own a house some day.

She also knew it wouldn't be easy. She's a single mother raising two children in Yakima and making $8.70 an hour in her job as a packer at Washington Fruit.


Two years ago, Sandoval decided to buy a house. After saving for 18 months, Sandoval found a low-cost mortgage that let her put down $1,300 to buy a $50,000 house at 1714 Garfield Ave. in Yakima.


"It's mine and my children's. It's my only investment," said Sandoval, who has lived in the home for the past six months.


"Why pay rent?" she added.


Sandoval was aided in her dream of home ownership by real estate agent Nestor Hernandez, 30, of Yakima. The former field worker has helped more than 60 Hispanic families buy homes in the two years that he has been an agent.


The Hispanic Chamber of Commerce of Yakima County recently nominated Hernandez as Realtor of the Year for the Yakima Realtors Association. According to the chamber, Hernandez had more closings than any other Yakima real estate agent in 2001.


Though Hernandez has had success finding homes for Hispanics to buy, they still represent a small fraction of those getting federally backed home mortgages. Hispanics, who make up a third of Yakima County's population, have snared less than 10 percent of the Fannie Mae mortgages in Yakima County, according to Colleen Haggerty, a spokewoman for Fannie Mae.


According to Fannie Mae, the agency held 930 mortgages for minorities, including 693 to Hispanic families, out of 7,900 issued to residents of Yakima County.




THE AMOUNT OF HOME LOANS for Hispanics is also smaller. Based on the agency's records, the average loan amount in the county is $87,500 for Hispanics as opposed to $112,000 for everyone else, Haggerty said.


Though the gap looms large, Hernandez said it's not necessarily discrimination in lending, but that banks have failed to understand Hispanics as customers.


Fannie Mae's Haggerty agrees with his conclusion.


"It's recognizing the needs of a new demographic," she said.


"They started to recognize that other cultures, especially Hispanic and Asian, save money not through banks, but in their mattresses.


"It's mattress money."


Mattress money is the term financial institutions have started using for these kinds of savings. Mattress money could be what they hide in a sock or bury in the back yard. It's money that never gets counted or held in an institution.


Fannie Mae has a lot of clout in determining which mortgages get approved, Haggerty said. The government-created agency buys mortgages from banks, but it will only offer mortgages that meet its criteria. And if a bank officer thinks that Fannie Mae won't buy that loan, he or she is less likely to offer the prospective home buyer a mortgage loan.


The gap is a cultural one, said Hernandez.


Many of his customers save prodigiously and pay their bills on time, as qualified home buyers do.


That cultural difference has also been observed anecdotally by some in the banking world.


"They are very good savers, very hard working, and they have more cash than the rest of us," said Kim Monfort, a loan officer for Pacific Northwest Bank in Yakima.


But many of the immigrants have little or no credit history. That's because they try not to owe anything. So banks have no record of their savings, no statements to verify what cash they say they have.


Since many are field workers, they also have no steady source of income. They can show that they worked throughout the year by saving all the tax forms given to them by employers. But many do not know they should hang onto the forms if they want to buy a house.


Even if they do, they sometimes need income verification statements to be signed by several orchardists and farmers. And the landowners may not prioritize the requests for forms to be signed and returned by their field workers.




BUT BANKS AND real estate agents are starting to grasp the cultural barriers that stand between Hispanics and home ownership, and they are finding ways to help families climb over them.


One way they start is by hiring bilingual staff at the bank and at real estate firms to work with Spanish-speaking home buyers.


Hernandez is one of them.


He brings with him an understanding of the cultural differences that make it harder for Hispanics to buy homes.


According to Hernandez, Mexican immigrants have simply adapted their spending and savings habits to the financial realities of Mexico. Banks fail. Officials steal money. Interest rates spiral out of control.


One way to stay safe and hang onto your money in Mexico is to live within a cash economy. Owe nothing, and you have no worries about interest rates. Hide your cash in your mattress, and you don't have to worry about banks collapsing.


Hernandez said he is often amazed by the way the minimum-wage field workers save their slender wages.


One field worker brought in $60,000 in cash that he had saved over decades to buy a $125,000 home in Selah.


The wife of another field worker walked into his office, picked the cheapest house, and said, "What makes you think I want a mortgage?"


The couple, in their early 50s, paid $27,500 in cash for a house in Tieton. They had also set aside money for remodeling, he said.


While these practices help in Mexico, they cause families problems in the United States.


By living in a cash-only economy, families accrue little or no credit history in the United States.




GOOD CREDIT HISTORY is one of a bank loan officer's top criteria when deciding whether to award a mortgage.


But banks are finding other ways of establishing credit history besides Mastercard and Visa.


"As long as we can get documentation that we need, there is no difference," said Monfort, the loan officer.


Banks and mortgage companies now ask for copies of past utility bills — to see if they have been paid on time.


They also take into account new sources of income.


Many immigrant families earn extra money by renting space in their homes to boarders. Those informal arrangements often add a boost to the families' annual incomes.


"It took us a while, but we realized that mattress money and boarder income are reliable income," Haggerty said.


For his part, Hernandez goes the extra mile by driving around to see orchardists in person, asking them to sign income verification statements for the field workers that they might otherwise ignore.


While Hernandez is making a personal effort to see Hispanic families succeed in home ownership, Fannie Mae and the banks are putting together a broader effort that includes new mortgage packages.


The hardest part of his job, says Hernandez, is letting Hispanics know that home ownership is an attainable goal, a dream within reach.


The average cherry picker, apple packer, or warehouse worker seldom knows about the enticing menu of low-cost mortgage packages sponsored by Fannie Mae and banking institutions.


These packages include low or no-cost down payments, reduced fees, and ways of incorporating mortgage insurance into the regular mortgage payments.




OFTEN, IT'S THE UPFRONT fees that keep people from buying homes, Hernandez said.


But in fact, buying a home may be cheaper than renting, Hernandez argued. He said he persuades minimum-wage workers to buy a home by pointing out they can either shell out $500 to a landlord or $500 to a bank. By renting, they shell out money forever. By buying, they may someday own a piece of America.