NeighborWorks Home Partners turns 40 with focus on first-time homebuyers, families of color

Jul. 29—Kali Terry comes from a long line of renters. Shortly before the pandemic, Terry broke the mold twice — if not three times over — by buying a duplex off St. Anthony Avenue and Victoria Street in St. Paul's historically Black Rondo neighborhood. The former union carpenter, corporate salesman and food truck entrepreneur has converted an attic space into a low-cost third-floor rental, positioning himself as not only an owner-occupant but also a landlord in charge of a triplex.

"That checked off two boxes — a first-time generational homebuyer in my family, and the first time I became a landlord, as well," said Terry, who grew up in South Minneapolis but became familiar with the area going to Rondo Days growing up. The way he sees it, St. Paul — and the Summit-University area in general — are on the upswing after losing population in the '60s and '70s and gaining it back ever so gradually over the past 40 years.

Homeownership has "changed my entire trajectory," said Terry, who rents out his two units at below-market rates to tenants with blemished credit or rental history. "I was paying more in rent than I am for my entire mortgage on a multi-family property. And from an equity standpoint, having this asset that creates wealth allows me to essentially provide housing and wealth creation for others."

At NeighborWorks Home Partners on Dale Street, organizers of the nonprofit's housing literacy classes and first-time homebuying programs are pointing to Terry as a success story — an example of how even during a recession and competitive housing market, new homebuyers can leverage grants and knowhow targeted to their situation to find affordable deals.

Terry was already closing on the duplex purchase when a housing adviser at NeighborWorks informed him about the nonprofit's Fix-It program, through which he was able to secure a low-interest loan to renovate the attic into a livable space.

The Fix-It loan financed 80 percent of the renovation. Without that kind of backing, "there's no way I would have been able to bankroll an entire attic conversion," he said.

RENTS HIGHER THAN MORTGAGE PAYMENTS

Sometimes, the biggest obstacle toward buying a home isn't financial.

Renters often lack education about first-time homebuying programs that can help with down payment and closing costs, or they're uncertain whether they can afford renovations.

Jason Peterson, chief executive officer of NeighborWorks Home Partners, said the Twin Cities is a unique housing market where rents are often higher than monthly mortgage payments for comparable properties. Yet many renters — especially people of color — still feel shut out from the possibility of home ownership.

NeighborWorks Home Partners is celebrating its 40th anniversary this year, but the occasion is bittersweet. Housing advocates say they're staring down race-based housing challenges that set the Twin Cities apart, and not in a good way, even during what many consider a national housing crisis. And it's not just a question of rising home prices and low inventory, though those trends haven't helped matters.

COMMUNITIES OF COLOR HARD HIT BY 2008 RECESSION

Overall, between 2000 and 2018, white homeownership in the Twin Cities region remained relatively stable at around 70 percent, according to the Urban Institute. Black homeownership declined in that time, falling from 31 percent in 2000 to 21 percent by 2018. That equates to a 50-point spread between Blacks and whites, and a 30-point difference between Latinos and whites.

Peterson said communities of color were especially hard-hit by the recession of 2008, including adjustable rate mortgages and other unscrupulous lending practices that cost many Black and brown people their housing, and they've never fully recovered.

"The homeownership disparities across the country are stark, but in the Twin cities they're terrible," Peterson said. "We're one of the metropolitan areas in the country where in general it's cheaper to purchase a home than to rent. That is still the best way to build wealth in our country. The average homeowner's net wealth in the United States is $254,900. The average renter's net wealth is $6,270."

He added: "The recovery since the Great Recession (of 2008) has been predominantly based on homeownership. The recovery is really still helping people who own homes. That's where the appreciation has been."

Peterson has taken a more helpful message to the airwaves through segments on KMOJ, in the pages of InSight News, and wherever BIPOC audiences can be found. There are still opportunities for moderate-income renters to break into the housing market, provided they're open to education, and in some cases, credit repair. NeighborWorks partners with the Minnesota Homeownership Center to provide one-on-one homeownership advising. That may include pulling savings and credit reports, determining how best to improve credit scores and an overall determination if homeownership is right for you.

"We sit down and look at each family's individual situation," he said. "For folks who are not ready to buy, we say that's great. If you're interested, let's get you on a plan. It may take you a year. It may take you five years. For folks who are mortgage-ready, we look at the different products. Our goal is to have two out of every three people that we help buy a home be from a BIPOC community."

EDUCATION, KNOWLEDGE

For mortgage advising, he encourages renters to make sure they're working with a HUD-approved counseling agency.

"The two biggest barriers we see for homeownership among BIPOC families is education and knowledge, and downpayment assistance," Peterson said. "There's still a lot of myths that you need to put 20 percent down and have a credit score of 700. We have a program we do called 'Homebuyer Basics,' and we bring the show on the road. We partner with different organizations so folks can get language-specific information."

Among those products is NeighborhoodLIFT, a $15,000 downpayment assistance collaboration between Wells Fargo and NeighborWorks America that received a major boost in Minneapolis and St. Paul in February. Wells Fargo contributed $7 million and the Department of Treasury contributed $4 million in federal relief funds. Through that program, the nonprofit is currently helping some 60 families buy houses.

"We're able to help folks put together competitive offers," Peterson said. "They're first-generation homebuyers who thought they wouldn't be able to buy a home."