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Adopting a new culture, Alterra sees its mortgage volume take off

By Kerry Curry | December 8, 2016

Adopting a new culture, Alterra sees its mortgage volume take offAlterra Home Loans formed nine years ago with a mission to help underserved consumers – primarily Hispanics – become homeowners.

About three years ago, Alterra revamped its culture and zeroed in on its mission with new accountability and transparency technology. Then its business took off.

The result has been nothing short of remarkable. Alterra – formerly Venta Financial – has grown 300 percent over the past three years. In August, the lender set a record $132 million in production volume. And it has forecast between $1.3 billion and $1.5 billion in total mortgage volume for this year.

How They Grew

About 60 percent of Alterra’s business is FHA lending and about 40 percent is conventional. It has a significant volume of high loan-to-value (LTV) business – including Fannie Mae’s HomeReady® product.

Alterra CEO and President Jason Madiedo is the son of Colombian immigrants. And he credits a culture change and focusing on the nation’s burgeoning Hispanic population for the company’s recent growth. He also gives plenty of credit to his mother, Ede.

Ede used the funds she earned from selling her house in Los Angeles to finance her launch as a mortgage loan officer in 1980. She focused on helping immigrants like herself realize the American Dream. Ede passed that passion on to her son, who began working with her when he was just 18. Today, she is a senior loan officer at Alterra.

“She told me I had to serve the Hispanic market, and I took that to heart,” Madiedo says. “I’ve now been doing that for 23 years.”

Starting Small

At age 22, Madiedo was getting married and bought an 800-square-foot, $77,000 short sale condo with an FHA loan in Diamond Bar, CA.

Madiedo later bought another home. He eventually sold both — garnering enough capital from the transactions to move to Las Vegas and partner with majority owner Felix DeHerrera to form what is now Alterra Home Loans. He draws on his own experience to highlight how homeownership can build wealth.

“I know there are ups and downs in the market, but overall homeownership is a great investment. It’s a steady investment that adds quality-of-life value as well as economic value.”

The Business Sense of Lending to Hispanics

While the Hispanic market remains dear to his heart because of his upbringing, Madiedo says he serves the market for two reasons. The first is a passion and devotion to his culture. The second is pure economics. Hispanics are leading the nation in household formation and household growth.

The Mortgage Bankers Association projects 5.5 million to 5.7 million more Hispanic households in 2024 than there were in 2014. And the Urban Institute forecasts that Hispanics will account for 52 percent of new homeowners between 2010 and 2030.

Buying power is on the rise as well. Hispanic income grew 7.3 percent in 2012 over 2014, according to the 2015 State of Hispanic Homeownership Report from the Hispanic Wealth Project.

The Hispanic homeownership rate was 45.1 percent in this year’s second quarter, compared to 71.5 percent for non-Hispanic whites. That leaves plenty of potential upside for the mortgage industry, Madiedo says.

“The Hispanic market is positioned for a lot of wealth growth and overall population growth. Everyone should be looking at the market,” he says. “This is a huge business opportunity.”

Seeds of Change

Alterra has been reaching out to Hispanics since its inception. But the mortgage lender really saw growth take off when it embraced a new culture Madiedo describes as “collaborative, compassionate, fun, hungry, and humble.”

Reflecting the company’s flattened leadership structure, Madiedo works out on the floor with other employees, although he does have space for private meetings.

“We are out in the open – all together – working every day,” he says.

The company hires mortgage lenders who thrive on a high-touch experience. They must be willing to pick up the phone to answer a borrower’s questions – even on a Saturday or Sunday.

“It’s not complex, it’s just time-consuming,” he says.

The company also decided to be more transparent via the use of technology from Motivity. Forgoing wall decorations, the company instead runs a live video feed of what’s happening in the business.

The new culture holds employees accountable for the quantity and quality of their work, and it initially resulted in some staff and management leaving, Madiedo says. “I think the new group has a lot to do with our growth. They were comfortable with the transparency. It’s been a pretty awesome transformation for us.”

Addressing Lending Challenges

Hispanic households are more likely than non-Hispanic whites to live in multigenerational households and in households with multiple incomes that can come from entrepreneurial endeavors that don’t generate traditional W-2s.

“We have to piece all that together,” Madiedo says, and show how each file meets the criteria and that the borrower is “a good solid paying customer with the ability to pay and to become a sustainable homeowner.” He notes that he’s seen some similar credit and asset profiles from Millennials. That’s another demographic the company is seeking to serve.

While these loans aren’t necessarily higher-risk, they are higher-touch, he concedes.

“The manufacturing process is more involved, so you have to have a commitment to help them. Manufacturing costs are increasing and the regulatory environment applies a lot of pressure to mortgage lenders,” Madiedo says. Higher-touch borrowers generally make the manufacturing process more involved and more costly.

Bright Future

Despite the challenges of underserved markets, Madiedo believes the opportunities they provide for his business outweigh them. “The future looks extremely bright — innovative, passionate,” he says. “There’s tremendous growth in this demographic and a lot of work to do. We are ready for that.”

Kerry Curry is a freelance writer for several Texas and national publications and is the former executive and magazine editor for HousingWire.