2019 AREAA
THREE – POINT
POLICY PLAN

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WHO IS AREAA

Founded in 2003, the Asian Real Estate Association of America (AREAA) is a non-profit trade organization dedicated to promoting sustainable homeownership opportunities in the Asian American and Pacific Islander (AAPI) communities by empowering our members to improve AAPIs through real estate. We achieve these goals through advocacy, business development, and education. AREAA represents over 17,000 members represented across 41 chapters. Our membership is made of successful individuals representing the largest brands across the banking, brokerage, lending and other real estate related industries.

The Asian American &
Pacific Islander (AAPI) Story

The AAPI demographic is key to our nation’s future economic and cultural development. According the U. S. Census and Pew Research Center, AAPIs will outnumber Hispanic Americans by 2055 and become the largest ethnic group in the country1. This rapidly growing population of Americans is highly educated, high-earning, and highly interested in homeownership despite overcoming generations of racial and cultural discrimination. Although AAPIs are the fastest growing population in the United States, and have been a pillar of our nation’s history for over 150 years, AAPIs continue to face challenges to buying a home. See more details at the end of the report for more data on the AAPI story.*

The Asian American &
Pacific Islander (AAPI) Story

Despite excellent financial data that quantifies AAPI candidates to be well-positioned homeowners, AAPIs fall behind Non-Hispanic White Americans by over 12% in national homeownership average rates2. The challenges facing the AAPI community are solvable, and will directly benefit the American housing and lending markets when resolved. To overcome these homeownership challenges, AREAA has adopted a “Three Point Policy Plan” that will help AAPIs achieve the American Dream of homeownership. These three policy points are outlined below.

1. Access to Alternative Credit

2. Expanded Language Access

3. Diversity & Inclusion

Policy Point 1:
Alternative Credit

THE PROBLEM

Many AAPI families, 73% of which over the age of 18 are first generation Americans3, come from cultural backgrounds that do not value or practice many of the financial systems common here in the West. For example, acquiring debt in order to establish credibility is often counterintuitive to many Asian cultures. In addition, many immigrant families seeking to lay roots in the United States may have the financial means and cash on hand to purchase homes, but lack the credit history in order to qualify for such purchases. The criteria of credit history, amounts owed, length of history, credit mix, and new credit established are all familiar facets to those who are able to establish credit in the United States from a young age. However, those with strong financial backgrounds who are new to the United States otherwise face several timely challenges in developing strong credit records.

In addition, many AAPIs prefer to make their purchases in cash at the time of purchase. This cultural practice of avoiding debt, and only making large purchases when cash is available is deeply instilled within many AAPI. As a result, many who otherwise would be able to feasibly purchase homes within the real estate markets do not hold the credit files to qualify for mortgage loans.

As a result, AAPIs have historically struggled with credit qualification as a result of thin credit files hindering them from otherwise reasonable acceptance rates. When compared to all other racial segments involved in the home buying process, AAPIs rank as the highest number of applicants to be denied because of thin credit files, despite being the highest earning segment of applicants4.

Research provided by our partners at Freddie Mac have shown that although AAPI rank as one of the most fiscally responsible and successful segments of Americans, when credit can be quantified, AAPI are often considered to be “mortgage weak” because of thin credit files and history records. 59% of AAPI who are considered “mortgage weak” in the home buying process struggle to achieve homeownership because of their thin credit files, although they hold no delinquencies and would otherwise be considered as favorable candidates5.

In today’s digital age, the traditional scoring models seem archaic and unable to quantify mortgage applicants of those with thin credit files, or those with new and developing credit histories. In order to bridge the divide between mortgage providers and potentially well-positioned homeowners, AREAA advocates for the expansion of alternative credit models, helping AAPI and other minority groups gain better access to homeownership and thereby improving American housing and lending economies.

Bringing the credit scoring system into the 21st century will allow lenders to responsibly account for different cultural and lifestyle backgrounds. Access to credit is fundamental to qualifying home loan, yet many AAPIs lack the substantial history required. Or, many AAPI have no credit history at all as a result of being immigrants coming from cultural backgrounds that do not favor taking on debt. By considering common sense criteria such as rent or utility payments, which are currently not counted toward a person’s credit score; hundreds of thousands of AAPI and millions of Americans (especially millennials) would be considered loan-worthy without having to sacrifice the safe standards in lending created in the wake of the housing crash of 2007-2008.

Last year, SB. 2155: The Economic Growth, Regulatory Relief, and Consumer Protection Act was enacted into law on May of 2018. Section 310 of this bill directs Fannie Mae and Freddie Mac to set up a process to explore alternative credit-scoring models in determining whether to purchase a residential mortgage. Currently, Fannie and Freddie use classic FICO scores for their mortgage purchases and continue to set the standard for the mortgage industry.

However, the 116th Congress has not introduced any legislation with mandatory regulations requiring GSEs to accept alternative forms of credit. Instead, Section 310 and its provisions see these options as considerations for exploration and not as additional required means of acceptable forms of alternative credit qualifiers.

THE SOLUTION

WE ASK: While passage of section 310 was an important first step, we encourage Congress to work with the Federal Housing Finance Agency (FHFA) to create legislation that mandates alternative credit methods be introduced and accepted into the marketplace and mortgage buying process.

Policy Point 2:
language access

THE PROBLEM

Over 77% of AAPI families speak a language other than English in their homes. However, many AAPIs have Limited English Proficiency (LEP) and require greater language access in order to homeownership.

19% speak English well, but not very well

12% do not speak English well

4% do not speak English at all6 

The purchase of a home is usually the largest financial decision any person can make – it is a daunting process for anyone, including native English speakers. It is important to make sure all Americans understand the size, scope, and consequences of this transaction. Providing in-language literature and services not only makes people feel more comfortable entering into this decision, but also better educates them to avoid any confusion or mistakes throughout the process.

THE SOLUTION

WE ASK: We encourage Congress to continue supporting and expanding the Federal Housing Finance Agency’s (FHFA) Language Access Multi-Year Plan to include further translations in more languages. Continuing funding for the Language Access Multi-Year Plan will allow the agency to provide greater support to more Americans, in their preferred languages. Continuing to fund the work of this initiative expands greater homeownership opportunities to AAPIs and other minorities for years to come.

AREAA fully supports the FHFA’s efforts to continue expanding upon existing language access resources, and we encourage members of Congress to allocate funds and resources necessary for FHFA to achieve their goals. FHFA has reported that the three resources said to be most desired by those facing language access problem include:

A dedicated in-language phone line for support

A checklist of important things to consider when completing a mortgage

An in-language booklet outlining the entire mortgage process

The Language Access Multi-Year Plan is a direct result of FHFA’s 2018 Scorecard for Fannie Mae, Freddie Mac, and Common Securitization Solutions and already tremendously benefits many Americans. Since its inception in 2018, FHFA has already made great strides in aiding Americans through the creation of:

An Online Clearing House:

A centralized collection of resources to assist lenders, servicers, and housing counselors in serving LEP borrowers.

Language Access Working Group:

A forum for representatives from the housing industry and consumer organizations to provide FHFA and the Enterprises their insights, commentary, and experiences related to serving LEP borrowers.

Glossaries:

Developed translated glossaries that play a foundational role for improving language access by establishing common terminology facilitating standardized translations for all other documents.

Disclosure:

Developed a translated disclosure available for use by lenders and servicers to explain that mortgage transactions are likely to be conducted in English, and that identification of a preferred language by the borrower does not mean that lenders or servicers are able to provide, or agree to provide, communications in the preferred language.

Language Access Line:

Developed and implemented a language access line that enables borrowers to obtain assistance from housing counselors and others in their preferred language.

POLICY POINT 3:
DIVERSITY & INCLUSION

THE PROBLEM

AAPIs representation lacks in many aspects in modern American society. Today, our nation celebrates and encourages all organizations to push for greater diversity and inclusion, in order that organizations can better serve their diverse communities. In contrast to recent trends, the housing, lending, and financial sectors have been reported as some of the least inclusive and least diverse industries according to the U.S. Government Accountability Office (GAO)7. The clear disparity and lack of inclusion of women and minorities spread across the financial services, lending, and housing bodies only further alienates ethnic groups, including the AAPI community. The effects of these disparities result in lack of cultural understanding and outreach to diverse communities.

AREAA advocates for the expansion of Section 342 of the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 to address and combat the lack of representation of women and minorities in the housing and financial sectors. 

The Dodd-Frank Reform should continue to be seen as necessary requirements for all industries to follow in order to best serve America’s growing diverse communities. Agencies, companies and regulatory bodies should be held accountable to increase multicultural outreach efforts while actively advocating for greater racial and gender representation within their own internal bodies. Furthermore, each of the GSEs and federal agencies should continue to expand their office of Minority and Women Inclusion. These initiatives should not be seen as punitive measures, but instead be celebrated as progress that aligns with America’s shifting economic forces and growing populations.

THE SOLUTION

WE ASK: For our lawmakers to implement the already-passed Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010, specifically Section 342.

Legislation has already passed, yet action must still be taken. Congress must enforce the current law to ensure that GSEs, banking, and lending entities within the United States are held accountable for their efforts to embrace and promote diversity. With this initiative, AREAA advocates that these entities focus on adequate multi-cultural and diversity training, representation and outreach. The proper execution of this solution will assist agencies in outreach efforts to diverse and often underrepresented communities. Expanding this law will increase racial and gender balances at financial institutions and regulatory agencies, resulting in greater outreach, understanding and representation of AAPIs and other minority groups.

DATA ON ASIAN AMERICAN & PACIFIC ISLANDERS

AAPIs are the Fastest Growing
Minority Group in the US

The U.S. Census projects an estimated 25.7 million AAPIs currently living in the United States. Between 2000 and 2015, the AAPI population grew 72%. Again, the AAPI demographic will eventually become the largest minority group in the country by the year 2055, heavily influencing and contributing to our nation’s economy.

AAPIs are High Earners & Hard Workers

On average, AAPI are high earners compared to the national average of household incomes. With an average median household income of $73K, AAPI families bring in 39% more than average household incomes of $53K. At 61% employment rates, AAPI are also the highest employed group out of any minority. AAPI have been consistently strong on reported weekly earnings when compared to other demographics. In 2017, AAPI were bringing in weekly earnings of $1010. In the Fall of 2018, AAPIs were earning the highest wages at an average of $1,095 .

AAPIs are Highly Educated:

87% of all AAPI high school students graduate and enroll in college. After high school, over 52% of AAPIs gain at least a bachelor’s degree, before 21% go on to earn an advanced degree, including a PhD, master’s, medical degree, or law degree.

AAPIs are Entrepreneurial:

Leading all other groups in new-business sales growth, there are approximately 2 million AAPI owned businesses in the United States with combined sales averaging around $359K per business, for a total of $708B in economic stimulus. Between 2007 and 2012 the number of Asian-American-owned businesses grew 24% and their sales increased by 38%, the highest sales increase of any ethnic group .

AAPIs are Economic Contributors:

Asian Americans are some of the top economic contributors in the U.S. economy. AAPI buying power has increased by 257% between 2000 and 2017. Today, Asian American spending accounts for over 7% of total U.S. economic spending. AAPI buying power is estimated to have exceeded $1 trillion dollars in 2017 and is expected to reach over $1.3 trillion by 2022. The 257% increase in economic power surpasses economic growth compared to all other segments of Americans .

Policy Committee Members

Dick Lee
IND Mortgage
2019 AREAA Policy Chair

Mony Nop
Compass | Mony Nop Real Estate Team
2019 AREAA Policy Vice-Chair

Tom Truong
EXP Realty
2019 AREAA National President

James Huang
Sperry Commercial Global Affiliates
2020 AREAA National President

Munt Alhussain
Quicken Loans
AREAA DC Metro

Don Choi
Foresight
AREAA Boston

Andrew Peters
Village Realty Buckhead
AREAA Atlanta Metro

Robert Shandley
Better Homes and Garden Rand Realty
AREAA NY – Manhattan

Hanh Hua
Bellator Real Estate & Development
AREAA Atlanta Metro

Amy Kong
Realty World Advance Group
AREAA San Francisco Peninsula

Emily Roberts
Dilbeck Estate Luxury Portfolio International
AREAA North Los Angeles

Ojas Tasker
Cabaellero & Associates Realty
AREAA San Antonio

Rod Valderrama
Keller Williams Capital Properties
AREAA DC Metro