NEW YORK, July 30 (Reuters) - GMAC Mortgage on Wednesday said it was offering a new type of loan targeted at immigrants, in a bid to protect revenues by reaching out to underserved borrowers as overall mortgage demand shrinks.
With the new loan, borrowers will be able to prove their credit-worthiness through their employment status, and utility and rent payment history for at least the last 12 months, said Rick Gillespie, chief marketing officer at GMAC Mortgage in Horsham, Pennsylvania.
The loan is meant to appeal to immigrants and other borrowers without a credit history in the U.S., Gillespie said. Typically, mortgage applicants need to provide information about their history with loans like student loans and credit cards borrowings.
Up to 30 percent of the qualifying income for the mortgage can come from members of the household other than actual borrowers, which appeals to larger households, Gillespie said.
Immigrants will make up more than 3 million of the 12 million new households expected to be formed this decade, according to a report from the Joint Center for Housing Studies of Harvard University.
Tapping underserved markets is important for mortgage lenders, because according to estimates from the Mortgage Bankers Association of America, mortgage lending next year should drop by more than 50 percent.
"I don't know of too many lenders that would say now, 'our plan is to reduce market share,'" Gillespie said.
It makes sense to find new ways to determine credit-worthiness for low-income borrowers, said Thomas Stanton, an expert in credit who has worked with government mortgage agencies.
Current measures typically use more data from middle-class borrowers to determine credit-worthiness .
GMAC Mortgage is the residential lending unit of General Motors Acceptance Corp., the finance arm of General Motors Corp. .