Public-private alliance pushes to close racial gap in Minnesota homeownership

Homeownership seemed out of reach for newlyweds Jacob Croonenberghs and Naima Mohamed. Money was tight and housing prices seemed to rise faster than what they could save toward a down payment.

But the American Indian-Somali couple beat the odds in Minnesota, where nearly 60 percent of minority families rent. They bought a two-bedroom, one-bathroom home in St. Paul in 2016 after attending homeownership classes and receiving down payment assistance.

"I love it. It's the perfect starter home," said Mohamed. "I am building something here."

It's an outcome the Homeownership Opportunity Alliance would like to see repeated. The alliance of banks, nonprofits and government players, including Minnesota Housing and the cities of Minneapolis and St. Paul, is launching the "Get Ready, Be Ready" campaign to help more families of color become homeowners. They're increasing community outreach and planning to buy ads with media organization like KMOJ 89.9 FM, which courts a largely black audience.

"So many individuals and families don't realize homeownership is possible for them," said Kasey Kier, assistant commissioner of Minnesota Housing, the state's housing finance agency.

That changes, she said, when people hear about the success of their families and friends who buy homes — and that's why the alliance, founded a year ago to address the disparities in homeownership in Minnesota, is making the extra push.

Across the state, 76 percent of white families own homes. That drops to 41 percent for families of color, and just 23 percent for black families.

To change that, alliance members are trying to connect families within reach of homeownership with the many programs that can help them get there, including financial coaching, classes on homeownership and down payment assistance.

"Many consumers are not ready for homeownership right now, but in six to 24 months we can get them homeowner ready," said Julie Gugin, executive director of the nonprofit Minnesota Homeownership Center and co-chairwoman of the alliance.

In Minnesota, there are 64,000 families of color currently renting that make enough money to become homeowners, according to the alliance.

Research by the alliance over the last year revealed a number of barriers that keep them from purchasing a property: credit scores, the lack of a down payment and misperceptions or distrust in the homebuying process.

Yet the nonprofits and lenders that offer programs say they have the capacity to help more people. Getting people involved has taken on more urgency given the tight market and rising rents, said Bill Gray, spokesman for the Minnesota Homeownership Center.

"It's an economy where rents outpace what their mortgage payment would be," he said. "Also, the home is still the way people make money and create wealth."

Ben Coulter, a branch manager with American Mortgage & Equity Consultants in Minneapolis said consumers and lenders need more information about what programs are available.

"A lot of times I will help clients Google stuff, but it takes time," Coulter said.

If he can't immediately say yes to a loan, he said, he tries to help clients plan ways to improve their credit scores over time.

"People feel like they have bad credit and they can't make it happen," he said. "You've got to pop the hood and see what's going on."

Cultural factors are also in play.

Past practices, such as redlining, excluded or limited black families from homeownership. More recently, predatory lending has made some people of color wary.

"African-Americans were more likely to be subjected to predatory lending before the financial crash," said John Patterson, director of planning, research and evaluation at Minnesota Housing. "There is a level of mistrust."

That's why the alliance is leaning on established nonprofit community partners, including the African Development Center, Minneapolis Urban League and Twin Cities Habitat for Humanity to provide some of the initial information and counseling to prospective home buyers.

It's also working with lenders to help Muslim families — some of whom who consider loans that require paying or collecting interest to be a violation of the faith — achieve homeownership.

"I would have loved to see things going faster then we are seeing," said Nasibu Sareva, executive director of the African Development Center in south Minneapolis. "We need the banks to be at the table and to have that willingness to do this."

The smell of a neighbor's cigarette smoke seeping through an apartment wall compelled Mohamed, 28, and Croonenberghs, 31, to look into buying a home. The couple had just had their first child and what used to be tolerable now seemed dangerous.

Croonenberghs, a health and wellness coach at the Minneapolis American Indian Center, turned to the nonprofit NeighborWorks Home Partners to learn more about homebuying.

After finishing the classes through NeighborWorks, they qualified for a mortgage, secured $7,500 in down payment assistance and found a beige rambler with white trim and a blue front door that fit their $160,000 budget.

There's a backyard for the kids — a plus now that the family has grown to two children. Mohamed is painting her boys' bedroom with a forest motif.

"That sense of permanence is important," she said.

The couple said they now share their homebuying experience with friends and family.

"You can get into a home," Croonenberghs said. "You just need to talk somebody and be committed."

Shannon Prather • 612-673-4804