July 2005 - Opening the Portal to Homeownership

First American Corp. is on a mission to help U.S. Hispanic consumers achieve the American dream via its Internet site.

By Vitisia Paynich

Ask anyone what he or she deems as the “American dream,” and what you will mostly hear people say is “to own a home.” Yet, if you’ve been paying attention to the news lately, you’ll know that in certain parts of the country, that dream is moving farther and farther away.

Home prices have skyrocketed in states such as California and New York, making it extremely difficult for low to moderate-income people to qualify for a mortgage, let alone come up with the 5- to 10-percent down payment. The dream may seem even more unattainable to ethnic minority groups such as U.S. Hispanics-a market that has often been misunderstood by those in the general financial and real estate sector.

While some continue to live in the dark about this particular market, others view U.S. Hispanics as an emerging market that must not be ignored. First American Corp. in Santa Ana, Calif., is one of those companies that believe there is mass potential. In January 2005, this Fortune 500 company, which traces its history to 1889, launched a Spanish-language Internet portal that offers Hispanics financial education and planning resources.

This $6 billion company is the nation’s largest data provider, which specializes in six primary business segments, including title insurance and services, specialty insurance, mortgages, real estate, credit information and screening information.

The idea of the Internet portal was conceived from a special program headed by First American’s Landon Taylor, vice president of market development. “As the corporate officer for the company, I was responsible for opening up, identifying and penetrating new market segments,” he explains. One of those programs that Taylor helped launch in October 2003 is the Emerging Markets Program.

“The main objective of that program is to make First American the brand of choice to what we see to be the fastest growing market in the U.S., which we affectionately call the emerging markets made up of ethnic minorities, new immigrants and moderate-income home purchasers. To that end, we have strategies in which to do that,” Taylor says.

In January 2005, First American launched the MSN Latino Personal Finance Center portal for Hispanics.

As First American was researching the U.S. Hispanic market, they realized that in order to successfully penetrate it, the company had to focus on solving the most significant barriers U.S. Hispanic consumers face. Taylor says the company discovered three primary barriers. “One is a lack of education and understanding of the home buying process; it can be very confusing. The second is a lack of available capital necessary to close [a home loan]. And third, is a lack of traditional credit history,” he explains.

To help overcome those barriers, the company created a couple of products for the U.S. Hispanic consumer. The first product is called the Affordable Homeownership Settlement Bundle. “What that bundle does is take several individual products, which show up as fees the buyer has to pay, and we wrap them all into one product. So, it makes it very simple and transparent,” according to Taylor. He adds that the bundle includes title insurance, escrow (closing costs), flood certifications, appraisals, a credit report and a home warranty, which are normally charged separately.

“Often times, there’s a lack of predictability as to what the costs will be, [and] sometimes, people get taken advantage of and are charged more,” he contends. “What we did was take all of those and wrapped them up into one product, guaranteed what the price would be and if the homeowner happens to be low to moderate income, we’ll reduce their cost to about an average of 25 percent.”

The second product that First American produced was the Anthem non-traditional credit product. Taylor explains, “Today, the widely used approach to qualify for a mortgage is a FICO score. And unfortunately, if you do not have the traditional credit history, you will not have a positive FICO score. And therefore, you will either be rejected or you’ll be pushed into a sub-prime or high-cost loan.”

However, First American realized that just because someone doesn’t have a credit card or a traditional bank account doesn’t mean that he or she is not credit worthy. “So, we created our own products that will help to substantiate the credit worthiness of a borrower who [perhaps] doesn’t have credit cards but pays his or her bills on time, pays rent on time, or has rent-to-own arrangements in which that person has paid on time,” he notes. Further, the company developed a database that calculates an alternative score for these borrowers. The collected data is then made available to the mortgage lending and real estate communities. Says Taylor, “[This program] has been received incredibly well by the market. People are like ‘Wow! It’s a great solution.’”

Creating these products for the U.S. Hispanic consumer was only part of the company’s overall goal. The next step was to spread the word and educate the masses. Thus, in 2003, Taylor began the process of creating an Internet portal. The company negotiated exclusive rights to the overall financial services section of the MSN Latino Website (www.msnlatino.com). Realizing that MSN Latino boasts approximately 4.3 million registered U.S. Hispanic users, First American set out to build a home real estate and financial services portal on the site’s Latino channel called MSN Finanzas. Visitors to the site could access information about homeownership, mortgages, credit, banking services, insurance and investments.

While First American believed it would be doing a great service by providing an online resource for the U.S. Hispanic consumer, the company wanted to be able to track these visitors who would ultimately be potential leads. In late 2003, around the time First American was planning the Web portal, Taylor met with Moe Farsheed, CEO of MindFire-a Web applications and service provider based in Irvine, Calif.-to discuss utilizing online tracking technology on the site to host a questionnaire for visitors.

Farsheed says, “First American’s focus was to develop a leading state-of-the-art portal for U.S. Hispanics, the emerging market buyer. Our suggestion was that in order to get to this goal, it would have to make these individuals feel like they are stakeholders in their endeavor and the way to do that would be [to maintain] communication with them to the best of its ability.” He adds that it’s important to offer that personalized, one-to-one relationship, where viewers could provide First American with suggestions that they feel are important.

The other objective for the portal was to find trusted top-tier brand partners for each of the site’s department pages. “We want to make sure that the company has a great track record in serving the Latino consumer; that it is committed to providing best in class service and then we will, [in turn], give that sponsor the exclusive representation to that department. We’ve done that in the mortgage department with National City Mortgage,” says Taylor.

In late 2004, MindFire officially contracted with First American to provide its Look Who’s Clicking technology. As the company was building the portal, MindFire was creating banners for the site, along with an incentive to visitors. “On each section, there’s a banner featuring an “Enter to Win” sweepstakes,” says Farsheed. “Basically, if you click on the sweepstakes, you come to an introduction about what [First American is] doing and a questionnaire of five to six questions that its asks. Once the questionnaire is completed, an automated thank you e-mail goes out.”

Thus, on Jan. 28, 2005, First American launched the MSN Latino Personal Finance Center. The portal generated great response. “In fact, the modules that MindFire hosts for us are some of the most visited portions of the site,” he adds. “It gives us great data; it really helps us to understand the performance of the site and what people are interested in and the demographics of the visitors. It’s been incredibly invaluable to not just have the site but to have it be smart.”

After completing the first quarter, First American was able to analyze the data generated from the site. “What we found was that an overwhelming number of visitors are interested in learning how to make investments,” says Taylor. “Additionally, what we learned is that more than 60 percent [of U.S. Hispanics] do not own a home today but the majority wants to.”

Another interesting finding was the fact that the age of the average visitor was 35-36. “We learned that people were very interested in knowing how to be part of the American dream and were willing to invest time to do so. And, we wouldn’t have known that if we just [hosted] a Hispanic site that just had information. By creating a relationship [with consumers], we really have only touched the tip of the iceberg at what we could do using MindFire technology.”

Farsheed says, “The idea behind the technology is: 1) to provide relevant, engaging communication to the end users, so when the end user sees something, it’s relevant information; and 2) for First American to have a better understanding of where its marketing dollars are going and how to more effectively use its marketing [budget].” For instance, Farsheed says that the company could use the collected data to tailor its direct-mail campaign. “One of the things that we could do there is use our technology to determine the best zips codes to invest its marketing in,” he says. So, for example, MindFire might direct a mailing to 15 to 20 different zip codes and then use its technology to track the response. From the data, the company might be able to identify the top five zip codes in which First American could concentrate its marketing efforts.

Taylor says that now that the first quarter is behind them with the new portal, they can sit down and examine the market research to determine the best way to market to U.S. Hispanics. Although it’s too early to say, he does admit that he is very optimistic about the future. “The biggest change that we hope we see as a result of this market is that [Hispanic consumers] become more educated and aware of their options. I think you’ll see a savvier customer who will demand better pricing and a gold level of service.”

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