SAN MARCOS, Calif. — Mortgage loan broker Yamila Ayad has beenin business for nearly 20 years in San Marcos, located about 40miles north of downtown San Diego. She's well established in agrowing Hispanic marketplace, and her small, bustling officehandles as many loans as some mid-sized credit unions–she closednearly 50 loans per month in 2004, during the boom.

But what's interesting isn't who Ayad's customers are; instead,it's how she qualifies them for loans. Historically, as many as 90%of home loan applications that come across Ayad's desk have two ormore unmarried, but related applicants, either as co-

borrowers or

co-signers.

Cultural traditions make it more common for Hispanic, Asian andother immigrant families to live under one roof together, orcombine assets to purchase investments that will grow familywealth.

But it's not just immigrants who need multiple income sources inorder to qualify for mortgage loans in California these days.

According to the California Association of Retailers, homeprices in the Golden State have increased so much that only 25% ofthe state's population earns enough to qualify for an entry-levelhome. First-time California homebuyers paid a median price of$477,400 in 2006, which is 2.5 times the national median.

And, Ayad points out, too high to qualify for a traditionalmortgage.

Many of Ayad's loans are funded by providers that participate inlow-income FHA programs, but not all of her clients qualify. Moreand more, Ayad is working with clients who earn median wages orhigher, but don't qualify for a half-million dollar mortgageloan.

Is Ayad on the cutting edge of a new trend in mortgage lending?If California property values hold, and they're expected to, shejust might be…at least until wages catch up with home prices.

Jeff Harper, vice president of lending at $870 million OrangeCounty's Credit Union, said he thinks he'll see a lot moremultiple-applicant mortgages pass through his division in thefuture. The Santa Ana-based credit union has brought mortgagelending back in-house, and is a couple of years into an initiativeto increase Hispanic membership and cater more to underservedmarkets.

Harper said the credit union has had difficulties making loansto first-time homebuyers due to affordability, even with $5 millionearmarked for that purpose. Orange County has some of the highesthome prices in the state, with a June 2007 median price of$645,000.

“We've only funded a few, and two or three of those wereinstances where a couple of families came together. We were able toqualify them that way, but they weren't what I would necessarilyconsider underserved,” Harper said. “People earning a typicalmedian income can't afford to live in Orange County right now, so Ithink a lot of families, regardless of ethnicity, are consideringthat approach.”

American First Credit Union is a $680 million institutionheadquartered in nearby La Habra, and includes all of Orange Countyin its field of membership.

Vice President of Lending Carlos Miramontez said he's seeingmore and more multiple-applicant mortgage loans from throughout hismembership, although Hispanic homebuyers still comprise themajority.

“It's gotten to the point where it isn't even a uniquescenario,” Miramontez said of homebuyers who pool their resources.“They're just people trying to buy a house, regardless of whetherthey are married, unmarried or family members.”

Miramontez agreed that economics has played a large role in theincreased popularity of multiple-applicant home loans, adding thatmost nuclear families prefer to buy a home on their own, but ifthey can't qualify, consider a larger home they can share withfamily members as a viable Plan B.

“I see it a lot in my marketplace. I wouldn't say it's to thepoint where it's become the most common application, but incidentshave definitely increased,” he said.

David Constantino, president and chief operating officer ofPatrion Mortgage, a wholly-owned subsidiary of $900 million AlturaCredit Union, said a significant percentage of his mortgage loansinvolve multiple applicants.

“I'm not going to say it's a lot, because I would consider thatto be more than 50%. But, I know that we approve loans like thisevery single month,” Constantino said.

Altura's field of membership centers primarily in RiversideCounty, which is 41% Hispanic, according to 2006 state censusfigures. Constantino said that multiple applicant mortgage loanswill continue to be popular in the Hispanic community, but said ifinterest rates continue to rise and housing values hold, such loanscould gain popularity in all cultures.

“Plus, as investors change criteria for down payments, and if itbecomes harder to qualify for financing, I could see that being afactor, too,” he said.

None of the men interviewed said they've had any problems withmultiple borrower mortgages. The loans sell well on the secondarymarket, mortgage approval software includes plenty of spaces toenter multiple applicants, and examiners have found no exceptionswhen auditing the loans.

Justin Grove, associate director of external affairs for theNCUA, said his examiners haven't identified any problems withmultiple applicant loans, but added that the agency doesn't reallytrack the loans, either. The only issue that may be worthdiscussing is differences between co-borrowers and co-signers.Co-borrowers must live in the home; if one co-borrower does notconsider the home to be his or her primary residence, the homewould be considered investment property.

A borrower may have a co-signer that does not live in the home,but the co-signers income isn't as strongly considered as aco-borrower.

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