July 31, 2021

MP Now News

Mortgage News

Part II: The Twin Cities housing market

BY MARGIE O’LOUGHLIN

In last month’s article on the Twin Cities housing market during COVID-19, real estate professionals described the market as “frenzied.” The result was a picture of houses in Minneapolis and St. Paul selling well above their asking price in a multi-offer climate. While this is a benefit for sellers, it leaves many buyers, especially first-time buyers and buyers with no deep pockets, unable to hold their own.
Trent Bowman is Vice President and Business Development Officer at MidWestOne Bank, where he continues his 25-year commitment to working with emerging minority homeowners. He is also President of the Twin Cities Chapter of the National Association of Real Estate Brokers (NAREB).
NAREB is an equal opportunity and civil rights advocacy group founded in 1947 to ensure African Americans (and other people of color) are treated fairly in all real estate transactions. It was founded in 1947 and is the oldest African American trade organization in the country.

Democracy in Housing
NAREB has chapters in the United States that are united in its vision of building democracy in housing for all. When asked if this vision is getting closer after nearly 75 years, Bowman said, “No. It has not yet been achieved – neither in the twin cities nor anywhere else in this country. “
In Bowman’s opinion, “a prospective minority home buyer must have a team behind him because there are roadblocks to home ownership.” Insurance professionals and much more. Visit www.narebtc.com to learn more about her work as a housing and resource attorney for prospective minority buyers.

Home ownership begins with
education
Homeownership is the surest way to build family wealth and strengthen communities – but black home ownership has fallen from 29% to 23% over the past decade. According to Bowman, “Foreclosure rates in color communities were higher across the country after the 2008-09 recession, and it has become much more difficult to get approval for loans.”
There are several nonprofits in St. Paul willing to partner with minority customers considering home ownership. In addition to providing resources, they send the message that potential home buyers should stop telling themselves that home ownership is out of their reach.
The list of these organizations includes the Homeownership Opportunity Alliance, NeighborWorks Home Partners, Hallie Q. Brown, the Twin Cities Urban League, Model Cities and the Neighborhood Development Alliance, and many others. Each offers home ownership classes, which are a prerequisite for applying for down payment assistance to any organization.
According to Bowman, choosing the right loan officer is one of the most important steps when buying a home. He said, “We’re helping potential homebuyers understand the importance of building their credit, strengthening their savings plans, and getting the bank on the road to success. Too often, minority loan applicants are turned down for the wrong reasons, which is very daunting. “
He continued, “A good loan officer will take the time to get to know a customer. This is not a transaction you conduct over the phone, but a conversation to discuss financial goals and realities. A dream home is not just a home that a customer can qualify for, but one that they can afford to stay in for a long time. “

Discrimination in housing continues
Racial alliances were restrictive acts that restricted the living space of people of color. The first racial union in Minneapolis was legalized in 1910, and the practice soon spread to sister cities.
In the 1930s “redlining” was created to discourage people of color from buying houses in white neighborhoods.
The Federal Housing Administration (FHA) used redlining as a method of assessing risk factors for federally protected mortgages. The color coding assessed neighborhoods with existing racial alliances positively and marked them blue. Areas where African American and / or “unwanted” immigrants lived had poor results and were marked in red. It became almost impossible for people of color to get FHA loans as their redlined neighborhoods were deemed too risky to scrutinize.
Although the 1968 Fair Housing Act made redlining illegal across the country, housing discrimination is far from over. Bowman said, “The FHA loans that used to be hard to come by for people of color are now often the way they enter the real estate market. Some listing agents state in their sales contracts that they will not work with buyers who have FHA funding. That’s a problem. Sellers may prefer buyers with conventional financing or, better yet, cash. FHA buyers cannot offer more than the home’s appraised value, which limits the competitiveness of their offering.
“Some real estate agents will also ask buyers to submit something called a love letter if there are two offers for a property that are essentially the same. In a love letter, the buyers introduce themselves and say why the seller should accept his offer over the other. These letters can get very personal and describe family makeup, jobs, neighborhood history, and common interests. Sometimes a picture is included. If one buyer has the same background as the seller and the other is a person with a completely different background or an immigrant who does not speak English as a first language, whose offer do you think the buyer will accept? “
To learn more about the history of Minnesota’s racially restrictive alliances and their lasting impact on today’s Twin Cities housing market, check out Jim Crow of the North on TPT: www.tpt.org/minnesota-experience/video / jim-crow -of-the-north-stijws /