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Passion for helping Hispanic customers spurs Alterra’s meteoric growth

September 28, 2016 | By

Alterra Home Loans formed nine years ago with a mission to help underserved consumers, primarily Hispanics, become homeowners.

About three years ago, after Alterra revamped its culture and zeroed in on its mission with new accountability and transparency technology, 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, set a record $132 million in production volume in August, and forecasts between $1.3 billion and $1.5 billion in total mortgage volume this year.

How They Grew

About 60 percent of Alterra’s business is FHA lending and about 40 percent is conventional with a significant volume of high LTV business, including Fannie Mae’s HomeReady® mortgage product.

Alterra CEO and President Jason Madiedo, the son of Colombian immigrants, 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 Madiedo.

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, a passion passed down to her son, who began working with her when he was just 18. Today, she remains a senior loan officer at Alterra.

Hispanic

(Jason Madiedo and his mother, Ede, at the 2016 convention for The National Association of Hispanic Real Estate Professionals, Sept. 20.)

“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 in Diamond Bar, California, with an FHA loan.

Madiedo later bought another home and 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 uses 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 — 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, while 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 growth rose 7.3 percent in 2012 over 2014, according to the 2015 State of Hispanic Homeownership Report from the Hispanic Wealth Project.

With the Hispanic homeownership rate at 45.1 percent in the second quarter of 2016, compared to 71.5 percent for non-Hispanic whites, there’s 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’s growth really took off about three years ago when it adjusted its culture into one that Madiedo describes as “collaborative, compassionate, fun, hungry, and humble.”

The company embraces a flattened leadership structure where Madiedo works out on the floor with other employees, although private meeting spaces are provided.

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

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

“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. With the new culture, the company has foregone decorations on the walls and instead runs a live video feed of what’s happening in the business. Each employee is held accountable for the quantity and quality of their work.

The culture change wasn’t easy and 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,” he says. “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 such as entrepreneurial endeavors that don’t generate traditional W-2s.

“We have to piece all that together and create a story on each file of why this file meets the criteria and why it’s a good solid paying customer with the ability to pay and to become a sustainable homeowner,” Madiedo says, noting that he’s seen some similar credit and asset profiles from Millennials, another demographic that Alterra seeks to serve.

While these loans aren’t necessarily higher risk, they are higher touch, he concedes, meaning the loan manufacturing process is generally more complex and costlier.

“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.

Bright Future

Despite the challenges of serving underserved markets, the opportunities far outweigh those challenges, Madiedo believes.

“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.”

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