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Minnesota Commerce Department partners with local nonprofits to expand homeownership opportunities

8/4/2016 9:33:55 AM

Goal is to help close the state’s homeownership gap

SAINT PAUL – The Minnesota Department of Commerce announces that seven nonprofit organizations across the state are receiving competitive grants to support homeownership opportunities for underrepresented Minnesotans, helping to address disparities in homeownership rates.

“To help equity in opportunity for Minnesota homeowners, we are trying to help boost financial knowledge and capability, and to reflect the changing needs of Minnesotans,” said Commissioner Mike Rothman, whose agency regulates the real estate industry in the state. “The goal of these grants is to help expand opportunities through education and support that will help prepare Minnesota homebuyers for successful homeownership.”

According the Minnesota Housing Finance Agency, Minnesota has the third largest gap in homeownership in the country, with a 35.4 percent difference in homeownership rates between white/non-Hispanic households and households of color.

While more than 76 percent of Minnesota’s white/non-Hispanic households own their homes, just 41 percent of Minnesota households of color do.

Overall, at nearly 72 percent, Minnesota has the nation’s second highest homeownership rate.  

Awarded through a competitive process, the grants will enable local nonprofits to advance and maintain successful homeownership for Minnesotans with historically low homeownership rates. The organizations will provide education and support to boost the financial knowledge and capability of their clients who are potential first-time homebuyers. 

The competitive grant program is supported by the state’s Real Estate Education, Research and Recovery Fund (REERRF), administered by the Commerce Department and funded by a license fee on real estate professionals doing business in the state.  

The following organizations are receiving grant funds over the next year:

Neighborhood Development Alliance (NeDa) will expand its matched savings and credit builder programs to give more would-be homeowners a boost on their path to homeownership. Goals include opening 15 additional Individual Development Accounts resulting in $57,000 of total savings for participants. The grant will also fund credit builder loans, aiming for a participant FICO credit score increase of 50 points.

The Minnesota Homeownership Center will leverage its authority as the statewide provider of homeownership services to integrate standardized financial wellness programming into homebuyer education. The standards will include training and evaluation and will seek to address the unique barriers to homeownership that households of color face.

One Roof will help first-time homebuyers in Duluth who have met some, but not all, homeownership milestones to obtain an affordable mortgage. Income-qualified households will participate in a two-year, 3:1 matched savings program that will help alleviate the savings barrier for potential homeowners who have sufficient income and credit to support a mortgage but are unable to save due to disproportionately high rent.

The Southwest Minnesota Housing Partnership will employ lending circles to help the increasingly diverse population of southern and western Minnesota to save for homeownership. Lending circles are a unique financial product where individuals who might not qualify for traditional lending products loan each other money to build savings and credit.

The City of Lakes Community Land Trust (CLT) will deploy its unique model of providing permanently affordable housing to the north Minneapolis community.  CLT will rely on longstanding relationship with industry professionals and community organizations to provide financial coaching to emerging markets that will ensure potential homebuyers are well-equipped for sustainable homeownership.

Twin Cities Habitat for Humanity brings a seamless approach to ensuring successful homeownership by offering first-time homebuyers a unique, affordable loan product coupled with financial education. Habitat’s mortgage program reduces barriers that first-time homebuyers encounter. Families also complete 20 hours of homebuyer education and work one-on-one with a financial coach to qualify for affordability gap assistance either through Habitat or other sources.  

Three Rivers Community Action will prepare diverse households in southeastern Minnesota for homeownership by providing both long-term and short-term financial counseling and homebuyer education. After home purchase, Three Rivers will provide home maintenance training to educate homeowners about how to operate and maintain their homes, with an emphasis on energy-saving strategies. This wrap-around education is particularly important to the clients that Three Rivers serves, many of whom are new immigrants not familiar with the banking system, real estate or Minnesota’s climate.

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