Intercultural Communication Theory and Lending

The lending industry in which I find myself professionally has struggled with many aspects of intercultural communication and it is very apparent, but perhaps solely to me. A recent study published by the Consumer Financial Protection Bureau and commented on by Director Dave Uejio “Black and Hispanic borrowers continued to have fewer loans, be more likely to be denied than non-Hispanic White and Asian borrowers and pay higher median interest rates and total loan costs” (HMDA Report, 2020). This incredible and continuing disparity has caused many people in the lending world to try and understand why and how to fix it. If we reflect on the last housing boom, the gap was much smaller, so what has caused this recent shift? In both cases, job loss occurred, bailout mortgage programs were created but absent back then was the incredible home price appreciation we are now seeing, which logically would send more people to the refinance table.

With most of the lending world still predominantly white male, I wonder if their natural predispositions and ethnocentrisms are “creating barriers for individuals of different backgrounds to communicate and understand each other” (Neuliep & McCroskey,1997; Lin & Rancer, 2003). The fear as it relates to conversing with a person of a different background, either because of having a bad experience, or not knowing how to communicate, work negatively towards reaching equity. The current and past push by the CFPB by collecting HMDA data, is to force lenders to improve based on a metric. Banks that are insured must adhere to CRA rules, the Community Reinvestment Act which requires banks to lend to all demographics in neighborhoods within their footprint to include low to moderate income borrowers to a certain percentage of their lending (Community reinvestment act, 2021). While these measures and enforcement are certainly needed, I realize this approach lacks understanding of diverse cultures in general and does nothing to solve the problem.

Looking at this issue not as something that occurs solely due to economic factors but more so from a lens of communication theory failures, then we could likely learn to bridge the gap even further. I believe the lending industry needs to continue to work towards hiring more diverse individuals and focus attention on those minorities. One idea would be to create more intergroups within the lending community. A place, community of peoples, or website where information would be readily available, and even in their language to foster a sense of comfort. Marketing efforts tailored to minorities, which look like them and speak their community languages. Home buying is often the largest purchase one makes, so to feel isolated and scared during a large purchase would push anyone away from the closing table, especially if they could not communicate effectively with their lender.

Ultimately, I think the answer is more awareness and understanding of cultures and intercultural communication, while also working to improve the composition of the lending world. The emphasis should likely start with intercultural training to bring awareness to the disparity followed by the hiring of more diverse groups. After all, if you look at the growth in the non-Hispanic population in the United States, they would be foolish not to focus more attention for purely economic reasons.

References

Neuliep, J. W., & McCroskey, J. C. (1997a). The development of a U.S. and generalized ethnocentrism scale. Communication Research Reports, 14, 145-156.

HMDA data. (2020). Consumer Financial Protection Bureau. USAGov. Retrieved November 20, 2021, from https://www.usa.gov/federal-agencies/consumer-financial-protection-bureau.

Lin, Y., & Rancer, A. S. (2003). Ethnocentrism, intercultural communication apprehension, and intentions to participate in an intercultural dialogue program: Testing a proposed model. Communication Research Reports, 20(1), 67-72. https://doi.org/10.1080/08824090309388800.

Wikimedia Foundation. (2021, February 3). Community reinvestment act. Wikipedia. Retrieved November 20, 2021, from https://www.wikipedia.org/.