Editor's Note: This article originally appeared in the September issue of DS News, out now.
As our culture becomes more diverse, you might assume that the workforce within our industry would naturally advance alongside it. However, anyone who has worked in the corporate world knows that the wheels of change often grind slowly, especially when they’re grinding uphill against a mountain of paperwork and existing regulations and well-intentioned misconceptions. Moreover, in speaking with an array of diversity and inclusion experts from across the mortgage industry, DS News soon learned that some of the most challenging aspects of successfully embracing D&I come from the fact that there are so many aspects of it that might not at first be apparent.
The business case for diversity and inclusion is well-established thanks to decades’ worth of research and real-world examples. A 2009 American Sociological Association study entitled “Diversity Linked to Increased Sales Revenue and Profits, More Customers,” revealed that “companies reporting the highest levels of racial diversity brought in nearly 15 times more sales revenue on average than those with the lowest levels of racial diversity.”
In 2015, McKinsey & Company’s “Why Diversity Matters” found that “companies in the top quartile for racial and ethnic diversity are 35 percent more likely to have financial returns above their respective national industry medians.”
“Understanding and embracing diversity and inclusion is a critical component in not only recruiting and retaining the best talent but also in being well positioned to serve your client base,” said Kathy Cummings, SVP, Homeownership Solutions and Affordable Housing Programs, Bank of America. During our conversations with some of the professionals at the forefront of our industry’s commitment to furthering D&I, DS News found that the ways in which organizations can pursue these goals are nearly as diverse as the workforces they seek to build.
“We truly value diversity at RoundPoint because it injects a wider range of thoughts, skill sets, experience, cultures, and communication abilities into our workplace,” said Kevin Brungardt, CEO, RoundPoint Mortgage Servicing [1]. “At the same time, it positions us to better serve an increasingly diverse customer base. An organization that makes the conscious decision to embrace diversity also benefits by having a stronger, market-competitive workforce. A company can only be as great as its people—and the more diverse those people are, the more diverse the company’s strengths will be.”
“Our customer base is diverse. We want to be able to address various needs and priorities in families’ lives,” said Dana Dillard, EVP Corporate Social Responsibility, Mr. Cooper [2]. “Our employee base, how we deal with them, everything from our website design to the graphics and the information we send them in the mail, all of it has to be thought through from a variety of perspectives.”
Nor is the importance of D&I limited solely to companies that are customer-facing. “Whether you are consumer facing or not, it’s crucial to understand why D&I matters,” said Sharron Levine, Director of the Office of Minority and Women Inclusion at FHFA [3].
“It comes down to engagement. Diversity and inclusion makes us all better, given that we’re all different and we’re all diverse in some way. You could be a white, middle-aged male, but you could also be from a rural demographic, which is very different from a white, middle-aged male who is from an urban environment and who thinks differently from the rural person. That’s not even getting into race or gender, because you’re comparing apples to apples—it’s geographical diversity.”
“Being diverse and inclusive tends to direct resources towards individuals and communities that have had barriers to economic activity or access or participation,” said Michael Ruiz, Director of Supplier Diversity, Fannie Mae [4]. “By going down that road, you’re putting resources into communities that have traditionally been underserved, and you are positively impacting the ability of the individuals that make up those communities to lead productive and happier lives. Building a sustainable community is all about having the resources with which to live in said community and to educate one’s families. You can’t do that without the economic underpinnings.”
DIVERSIFYING THE PIPELINE
“It’s more of a conversation about expectations as we do not have targets or quotas in place,” said Stephanie Roemer, Director, Workforce Diversity, Freddie Mac [5]. “When it comes to both hiring and promoting, it is your obligation to ensure that internal and external talent pipelines are diverse. By doing so, you are increasing opportunities to diversify the workforce at all levels.”
Many of those we interviewed touched upon this notion of “the pipeline,” suggesting that D&I hiring initiatives should be more about ensuring access and working to recruit from a broad and diverse pool of talent rather than trying to tick boxes off from one subcategory or another arbitrarily.
“Our clients have a desire and an expectation to do business with companies where the employees reflect the individual differences of the communities in which they serve,” Cummings said. “Making sure we’re aligned, understand, and have language capabilities is going to help our clients better understand the financial services we provide.”
“When I think of diversity, it doesn’t only represent the standard differences we talk about regarding race, culture, gender, sexual orientation, and so on,” said Adam Saab, EVP and COO, LoanCare [6]. “It’s also about including people with varying backgrounds. If we want to move the mortgage industry forward, we have to think of innovative ways to do that. I’ve had great success with people from industries outside of mortgage, bringing them in and applying their prior experience to new ways of doing the work.”
“I entered the industry by chance,” Saab continued. “A guest from a large bank came into the bar I was tending, recognized my ability to relate with people, and thought I might be a good fit. Six months later, was working for a large bank as a loss mitigator. If that person had thought, ‘We are only looking for someone with mortgage experience,’ and hadn’t recognized that people from other industries have things to offer, then I wouldn’t be here talking with you today. If you only hire the same kind of people you already have, you’re going to miss out on new ideas and innovative ways to move the industry forward.” One of the diversity challenges many companies are facing right now concerns the generation gap as the industry works to both better serve and effectively recruit from the millennial and younger generations, bringing them into a workforce that has often trended older.
“The employees that we’re hiring now are younger, just out of college, more millennial, and diversity and inclusion is important to them,” Dillard explained. “They value that feeling of community at work, that feeling like you’re accepted for who you are, that you can be your authentic self at work and be valued because you’re different. Everybody doesn’t have to be the same. That is the table stakes when it comes to hiring these days. We have to up our game, so we have an industry that’s exciting and appeals to the new worker.”
“Our goal is to have a good mix of legacy employees who have been here for a while and fresh faces from varying backgrounds,” Saab said. “We are strongly focused on getting people fresh out of high school or college via intern programs. Our industry has a lot of really good folks who’ve been here for decades, but how do you relate to the new generation of homeowners who are coming up? It’s sometimes hard for someone that grew up in a time before digital communication to fully grasp the millennial generation’s desire for all-digital communication.”
“You’ve got a large sector of baby boomers who are your customer base. You may alienate those clients if you try to force everyone into automation,” Cummings said. “So how do you provide services that are going to be appealing and acceptable to all generations of your client base? And how do you have the employees who are going to be able to assist those particular clients? I have two millennials myself, and if you don’t text them, you’re not going to hear from them."
Exploring these questions of how to best communicate with the borrower is a crucial one for both lenders and servicers, and one that is becoming more important as more millennials and the younger generations age up into homebuying age. One of Bank of America’s solutions was to create a streamlined online Digital Mortgage Experience. “It’s super simple. It grabs all of your information, deposit information, loans, credit card data. You don’t have to supply us your bank statement cause guess what? We already have it. So, it’s data compilation but that still might not be the solution that the baby boomer generation is ready for,” said Cummings. “We are evolving to serve the technology needs of the younger generations while keeping intact our services and capabilities clients have always been able to rely on us for, creating a high-tech, high-touch environment,” Cummings continued.
Along similar lines, LoanCare created an app designed to appeal to and address the needs of younger consumers.
“Borrowers today don’t want to make the phone call, they don’t want the letter in the mail. They want it live on their phones, able to make their payments, answer questions about escrow,” Saab said. “Everybody talks about digital communication, but we invested in it.”
Saab says that app came about as a direct result of conversations with some of the company’s new hires, who were asked how they would like to be communicated with as a potential homebuyer. Those perspectives wouldn’t have been there to spark that innovation if LoanCare hadn’t put a focus on attracting that fresh blood into the company. But Saab admits that learning how to recruit the younger generation didn’t necessarily come easily.
“We would hold job fairs, but we weren’t going out and saying, ‘How can we appeal to young people who are trying to decide on a career?’ Many of them don’t even know that this job exists,” Saab said.
It’s also important that organizations look for partnership opportunities that can help support their D&I goals. According to Freddie Mac’s Roemer, one way the GSE has attempted to recruit a more diverse workforce is through “targeted partnerships” with groups such as the Hispanic Scholarship Fund and the Thurgood Marshall College Fund. “Those are underrepresented demographics, so we’re reaching the students at a broad group of universities without having to visit 10 to 15 schools individually.”
LoanCare participates in a program known as the Military Spouse Employment Partnership (MSEP). “There are 500,000 active military here in Virginia Beach,” Saab said. An initiative of the Department of Defense, the MSEP works to partner human resources departments with military spouses looking for employment. “It’s a pool of people to tap into who have varying and diverse backgrounds, and hiring from them helps the community as well.”
INTERNAL CHANGES, EXTERNAL RESULTS
“We’re not here to blame anyone,” Levine continued. “We’re not here to excoriate anyone. We’re here to try and work toward a common goal, taking into account that people need to be brought along. If we’re going to be successful, we have to work with others so they can understand that including people who are diverse doesn’t mean we’re excluding other people.”
Making those efforts can create solid, measurable results within an organization, however, making any road bumps along the way well worth navigating. How do you measure those results, however? Mr. Cooper’s Dana Dillard cited an internal survey focusing on employee engagement the company conducts every other year.
“Our overall employee engagement score was 81 percent,” Dillard said. “Eighty-one percent of our employees feel engaged with their work here. Seventy-eight percent of our employees felt like the workplace was better than it was 12 months before, and 93 percent of our employees said they supported the values we’ve laid out, including D&I.” Of the 44 questions on the survey, Dillard said the percentage of positive responses improved on all 44. Explaining that Bank of America has a “top-down leadership approach to D&I,” Kathy Cummings singled out one of the D&I initiatives Bank of America has created, called Courageous Conversations. “These discussions take a deep dive into subjects that are often taboo in the workplace, in a setting where employees can listen, ask questions, and better understand workforce differences. Topics in the past have included things like race, religion, and sexual orientation, and it’s a safe environment where employees can go learn. The more educated you are about somebody else’s differences, the more you can understand and learn how to work with people from various backgrounds.”
Mr. Cooper’s Dillard was also eager to spotlight the organization’s “Cooper Resource Teams,” an initiative designed to help build that internal employee engagement in D&I. The company has 10 employee resource teams, including groups such as Cooper Pride, an LGBTQ group; Interfaith Coopers, which unites employees from a variety of religious backgrounds; and groups for employees of Asian, African-American, Hispanic, and various other ethnic descents.
For a new resource group to get the green light from Mr. Cooper, it needs to have at least 30 members who are interested in participating. “It can’t just be a free-for-all where every team gets to do whatever they want,” Dillard said. “We have ‘the four Cs’ that every group has to focus on: community, career development, connecting, and giving back to the company.” Dillard meets with the groups on a monthly basis to ensure they’re living up to their charters and spending their time and money appropriately.
When asked for advice she might have for other organizations looking to emulate the idea of Mr. Cooper’s resource groups, Dillard said, “Make sure it’s not just a social thing because then you don’t have the depth that you need to make these teams a real resource.”
One way the resource groups give back is that new hires at Mr. Cooper can request a Cooper colleague from any of those teams—a sort of mentor. Dillard explains, “The first week you come to work here, we send you an email, we introduce the teams and say, “Would you like to get to know somebody from this team?’ They’ll onboard you for 30 days, introduce you to that group, and help you acclimate to our world.”
Freddie Mac recently experimented with a similar pilot program, according to Roemer. Freddie Mac’s program engaged a group of high-performing female directors and managers and then put them through an awareness and training program about what it means to be sponsored. “Where mentorship might be a 50/50 relationship, with sponsorship the person who is being sponsored is like 90 percent responsible for this relationship,” Roemer said. “The person being sponsored needs to ensure they’re showing up for the sponsor and driving the relationship. When managed effectively, the sponsor can significantly help the person being sponsored grow and develop their career.”
Roemer also pointed to the organization’s neurodiversity program as an example of an internal program celebrating and encouraging diversity. “We have an internship for adults on the autism spectrum. They’re high functioning, usually with at least an undergraduate degree or a master’s degree. They’re filling roles where these individuals have the skill and the ability to do the job, but they are sometimes challenged in getting through a traditional interview process, a phone screening process, or they just can’t actually get the work experience to support the degree that they have.”
Roemer said that Freddie has had the neurodiversity program in place for five years now: a 16-week paid internship designed to give neurodiverse individuals “exposure to the business as well as a runway for them to prove themselves.” If all works out well, they’re converted to a full- time Freddie Mac employee, and at the very least, they have a solid work experience they can take with them on a resume.” Roemer said that the program brings in four to five individuals a year, and over half of them have been converted to full- time Freddie Mac employees over the course of the program’s five-year existence.
The American Mortgage Diversity Council came about as the result of a conversation between Fannie Mae’s Michael Ruiz and Ed Delgado, President and CEO of the Five Star Institute. “We were at an event, and I knew him by reputation and by sight,” Ruiz said. “I walked up to him and said, ‘My name’s Michael Ruiz. I’m with Fannie Mae, and I think that we’ve got an issue that bears discussion, so I’d like to talk to you about it.’ We set up a meeting a week or so thereafter, and that conversation is when AMDC came to be.”
This year, Bank of America partnered with the American Mortgage Diversity Council for a series of LGBT Town Halls. BOA and the AMDC hosted events in Dallas, Chicago, Miami, and Los Angeles. “The structure is focused on learning the challenges within the LGBT community when it comes to credit access, to buying a home, that sort of thing,” Cummings said. “The next step is to write a white paper, put together a toolkit and help set some understanding and groundwork for how to approach homeownership in the LGBT community.
“A big piece of it is making sure everybody feels included in the D&I journey,” Dillard said. “This is not something that is separate from the work—it is part of the work. You have to think about the subtleties. Like when you’re in a meeting and some people aren’t participating. When you’re handing out projects, do you always go to the same people; does everybody get a chance? Are you asking people without kids to do more than people who do?”
“You have to make it genuine,” Saab said. “Too many times, companies treat diversity as a check-the-box exercise, and it can feel forced. If you are going to invest time in making diversity a priority in the company, you must be prepared to take the appropriate action. If you realize your gaps and fail to take action, that can be worse than not acknowledging diversity is important in the first place.”
“Diversity and inclusion is not a fad; it’s not a passing fancy,” Ruiz said. “There are different measures or different avenues by which to demonstrate one’s commitment, or an institution’s commitment, to diversity and inclusion. But when employed effectively, diversity and inclusion initiatives tend to allow you to make better decisions because you have a broader look at the world.”
“A frustration I have is that a lot of people don’t feel like they’re involved in the D&I journey,” Dillard said. “People may think, ‘Oh, D&I is important, but that doesn’t involve me.’ And it involves everybody. Because everybody can have a daughter. Everybody has a sister. Everybody has that next generation that’s coming up in the workforce who that needs that extra support and encouragement. Especially for those of us in the industry who are in the last chapters in our careers—the last quarter of the book versus the first quarter of the book— that’s our responsibility. To leave this industry better than we found it and to provide a place where women, people of different religions and nationalities, and people of color all feel supported, encouraged, and celebrated.”