Publications
Translating Disclosures for the Hispanic Market, The Benefits of Translating Key Documents
Author(s): Andrea Lee Negroni.
"Translating Disclosures for the Hispanic Market, The Benefits of Translating Key Documents" December 2004 issue of Mortgage Originator (Andrea Lee Negroni and Camilo Munoz, co-authors)
Issue Date: Mortgage Originator Archives, Posted On: 12/1/2004
Translating Disclosures for the Hispanic Market*
by Camilo Munoz and Andrea Lee Negroni
The emergence of the Hispanic segment of the U.S. financial services marketplace has been in the limelight since the 2000 census data were published. At the recent Hispanic Banking Forum sponsored by the Consumer Bankers Association in Washington, D.C., speakers including representatives of the U.S. Hispanic Chamber of Commerce, BB&T, Bank One/J.P. Morgan Chase, Citigroup, Wells Fargo, and LaSalle Bank reinforced the numbers, citing eye-popping statistics on the growing size and influence of the Hispanic market.
In addition to sheer numbers, the speakers focused on how to reach potential customers among the Hispanic population. Research provided by National City Bank identified three factors essential to development of a financial services marketing strategy: the culture of origin of the potential customer, his acculturation level, and his language usage. Borrowing a theme from M. Isabel Valdes, author of "Marketing to American Latinos: A Guide to the In-Culture Approach," Cristian Sandoval of National City noted that "messages must fit the cultural context and the mind-set of the audience -- the message must speak the culture."
This article addresses one of the three factors identified above: language usage. The most obvious and simplest way to fit the cultural context of Hispanics is communicating with them in Spanish. In consumer finance, the language of financial transactions frequently involves terms of art, legal terminology, and arcane words. When financial documents are challenging in English, it is unlikely they will become more transparent or user-friendly when translated into Spanish. Notwithstanding this, it stands to reason that if a potential customer is more comfortable communicating in Spanish, well translated documents provided to him in both English and Spanish can only increase his likelihood of comprehension. Even among Hispanics of so-called "high acculturation" who are English language dominant and who may not speak or understand Spanish, the availability of Spanish-language marketing or transaction documents may enable a lender or broker to "speak the culture" in a manner that appeals to the potential customer.
With the foregoing statistics in mind, and with financial institutions focused on how to reach the Hispanic marketplace comes an opportunity for the mortgage brokerage industry to consider Spanish language outreach, particularly in markets where Spanish is widely spoken. Such markets are no longer limited to California and Texas. The markets of New York, Miami, Austin, Dallas, Houston and San Antonio represent one-third of Wachovia's footprint, covering 30 percent of the overall U.S. Hispanic population). Important markets also include the Northeast Metro market (DC, Baltimore metro region, 18th largest Hispanic market), Atlanta (nation's 23rd largest Hispanic market), and even North Carolina (Charlotte, Research Triangle, and Triad regions), which has the country's largest Hispanic growth rate, according to BB&T Bank.
Among consumer financial transactions, mortgage loans are among the most reliant on legal language and the most complex, making the mortgage business a prime candidate for translated documents. In addition, the myriad of fees and charges associated with mortgage loans creates both an obvious opportunity and a pressing need for the industry to provide clear and thorough explanations. When one considers that nearly 40 percent of U.S. Hispanics have no traditional banking relationships and are underserved by financial institutions, it is apparent that the need for clear explanations of transaction costs is heightened when Hispanics are involved.
About five years ago, the National Association of Mortgage Brokers (NAMB), working with the Mortgage Bankers Association of America (MBAA) developed a model form "Mortgage Loan Origination Agreement" (Mortgage Loan Origination Agreement-English) for the purpose of disclosing to potential borrowers the fact that mortgage brokers earn their fees for providing wholesale priced loans. The Mortgage Loan Origination Agreement was an attempt at compromise between the industry and the Department of Housing and Urban Development (HUD), which took the position that without a specific compensation disclosure, consumers would not understand the role or purpose of "yield spread premiums" paid to brokers by lenders in residential mortgage transactions. HUD proposed a rule that would require the use of a mortgage brokerage agreement, but the rule was not adopted. Instead, many in the mortgage brokerage industry voluntarily adopted the NAMB/MBAA form of disclosure.
The drafters of the Mortgage Loan Origination Agreement should be congratulated on devising a document that is relatively straightforward and not overly burdened with legal language. We still consider the Mortgage Loan Origination Agreement a valuable tool in the arsenal of mortgage brokers and recommend that if used with Spanish-speaking consumers, it should be translated into Spanish (Mortgage Loan Origination Agreement-Spanish)One way to do this without increasing production costs would be to offer the agreement in English on one side of the page and Spanish on the other. The English and Spanish verisons can be printed from this article for use by mortgage brokers. (Although we have to notify you that the agreement is not intended as legal advice to any party; it is not a substitute for any similar agreement required to be provided by state law or any other law to which the mortgage broker is subject. It may be necessary to modify the agreement to comply with the requirements of state law.)
Obviously, the Mortgage Loan Origination Agreement is only one of many documents used in a mortgage loan transaction. Many other documents, including the note, mortgage, Truth-in-Lending Statement, and HUD-1 closing statement, should be made available in Spanish by a financial service provider seeking to make a genuine effort to reach Spanish-speaking consumers in their own language. We hope that by making this key document available to the industry, mortgage brokers in Hispanic-concentrated markets will be able to gain a foothold, and eventually the loyalty, of this key segment of the population.
*Author's Note: Materials provided by Wachovia Corporation noted that the purchasing power of Hispanics is $700 billion, and wealth accumulation among Hispanics in the U.S. is occurring twice as fast as in the general population. Most of the statistics and data in this article are taken from materials provided by speakers and panelists at the CBA's Hispanic Banking Forum, Washington, D.C., September 22-23, 2004.
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