Affordable Mortgage Financing Helps Promote Home Ownership

Over the last year the Headwaters RDC supported the efforts of the HHDC and the Beltrami County HRA to promote home ownership by accessing affordable financing products for use throughout the Region.  Headwaters RDC staff helped Beltrami, Clearwater, Hubbard and Mahnomen counties and the City of Baudette receive allocations of Minnesota City Participation Program (MCPP) low interest mortgage financing.  More than $2.5 million of MCPP mortgage funds were utilized in the Headwaters Region in 2007.  An allocation of funds was received in each county in 2008 as well.

Headwaters RDC also worked with lender consortia in Beltrami County and the Park Rapids area to obtain Community Activity Set Aside mortgage financing to support the construction and sale of affordable single family housing in those communities.  HRDC staff also acquired gap financing resources from Minnesota Housing and Greater Minnesota Housing Fund to help moderate income families get into homes that they would otherwise be unable to afford.

The Headwaters Regional Development Commission was recently certified by the Minnesota Home Ownership Center to provide pre-purchase home buyer education and counseling services. Mary Thompson has completed the certification process for services and intends to develop a system that will ensure the availability of service throughout the Headwaters Region. 

The pre-purchase education program is known as Home Stretch.  Home Stretch is designed to take the mystery out of the home buying process and prepare potential home buyers to make an informed decision regarding when, and if, home ownership is right for them. 

The Home Stretch workshops cover such topics as: 

• knowing your financial situation;
• credit and credit issues;
• types of home ownership;
• the role of the lender;
• understanding the loan closing process;
• legal rights & responsibilities as a home owner.

In some cases prospective home buyers need more assistance than the education provided in the Home Stretch workshops.  Individualized counseling, provided by a trained home-ownership counselor, can provide households with information on financing options that best meet their needs.  If, for any reason, a household is not quite ready to purchase a home, or if they have encountered barriers on the road to home ownership, a counselor will work with them to create and implement step by step plans to remove these barriers and help households become successful home owners.

The Headwaters RDC is currently developing the education and counseling system intended to serve the Region.   Headwaters RDC staff will be working to develop partnerships in order to build a robust education and counseling program.   In some areas the classes and counseling will be carried out by Headwaters RDC staff, while in other areas we will seek qualified partners to provide the services under contract.  In all cases, strong local support is needed in order for the system to be effective.

One local example illustrates this point.  Headwaters RDC conducted an initial Home Stretch workshop in Park Rapids on April 19th, and plans are underway for a second workshop to be held in the early summer.   Currently Headwaters RDC staff is working with a Real Estate Professionals group in Park Rapids to further the education and counseling efforts, as well as increase the affordable homeownership opportunities in the Park Rapids area.  The group is made up of lenders, realtors, a title company, a developer, the Hubbard County HRA and others concerned with affordable home ownership.  The Real Estate Professionals group has emerged as a strong supporter of increased home ownership opportunities in the Park Rapids area.  One of the participants in the group, the Human Achievement Performance Academy (HAPA), is a non profit organization dedicated to helping lower income households make sound financial decisions.  HAPA is an ideal partner of the Headwaters RDC to provide the individual counseling services in Hubbard County.  Headwaters RDC will work with a variety of partners in order to provide the opportunity for home ownership throughout the Region.

The Real Estate Professionals group has emerged as a strong supporter of increased home ownership opportunities in the Park Rapids area.

The need for housing for very low income individuals and families in the Bemidji area continues to grow.  Ours to Serve House of Hospitality turns away more families than it is able to serve due to lack of space.  Several organizations in the Bemidji community are working together to help create stable affordable housing and support services for this vulnerable population. 

The Headwaters Housing Development Corporation was awarded nearly $4 million by the Minnesota Housing Finance Agency, Greater Minnesota Housing Fund and Minnesota Department of Human Services to help finance a 20 unit supportive and transitional housing development in Bemidji.  The project is intended to provide housing and services to low income families to enable them to make a successful transition from homelessness.   HHDC is the developer of the housing which will ultimately be owned by the Beltrami County HRA.  Partners in the project include Bi-County CAP, Red Lake HRA, the Leech Lake Band of Ojibwe, and D.W. Jones Management Company. HHDC hopes to break ground in the fall of 2008 or spring of 2009.

~ Barbara Meuers,
Bi-County CAP Self Sufficiency Counselor, Bemidji City Council

With County Board approval, the Hubbard County Housing and Redevelopment Authority recently implemented its levy authority which will generate $200,000.  The levy will be matched by the Greater Minnesota Housing Fund under its HRA Levy Initiative.

Given this impetus, the Hubbard County HRA contracted with the Headwaters RDC to complete a countywide housing study and plan.  Headwaters RDC has subcontracted with Community Partners to conduct a housing study, including an analysis of needs and opportunities within each of the four municipalities.

Headwaters RDC staff will lead the development of the housing plan.  A newly formed Hubbard County Housing Partnership will guide the completion of the housing study and plan and will be instrumental in implementation activities.  Financial support for this work was provided by the Hubbard County HRA, Minnesota Housing Partnership, Northwest Minnesota Foundation, and Headwaters RDC Successful Communities Challenge Fund.  The study will be completed in early July and the Plan by the end of the year.

For 2008 the HHDC continues development of single family affordable homes utilizing well-established building models as well as pursuing new ventures. Specifically, the HHDC has initiated new projects that will enhance our regional presence, promote sustainable building, and reach lower income levels.

The HHDC will complete construction of eleven homes this year utilizing our traditional business models. Work will continue with the ICWC crew in Beltrami County as they produce six homes annually for the HHDC. The Bemidji High School carpentry program will continue their success with the completion of two homes.  Additionally, the HHDC is establishing a presence in Park Rapids by working with a dynamic private contractor.

The HHDC is committed to geographical expansion of housing development activity. Currently, we are developing housing projects in Baudette, Blackduck, Bagley, and Gonvick. All of these communities have strong commitments to affordable housing and have offered various sources of leverage to help the HHDC break into these areas.

Sustainable building and design are at the forefront of affordable housing development and the HHDC intends to lead the charge.  With increased energy costs affecting everyone, the HHDC must focus on the development of energy efficient “green” homes. This is not to say that we haven’t focused on efficiency in the past, however, it does mean that, to remain competitive in the industry, we must do all that we can to improve our standards of building and material use. Our State funding partners are mandating new criteria that focus on green design and efficiency which means that they will be willing to increase subsidy as they understand that going green will mean increasing development costs per unit. We are in a cool place; we are poised to lead the green home building revolution for our Region.

Current market conditions and increasing development costs have led the HHDC to pursue ways of reaching lower income niches. One way to reach lower income families is through rehabilitative housing efforts. Many of our largest funding partners are giving priority to rehabilitation housing projects. The premise is simple: find decent existing homes in need of work; buy them, fix them up, and sell them on a contract for deed basis. The impact will be great as we will be able to achieve many goals with such projects. We can improve the aesthetics of blighted neighborhoods, reach lower income families, and incorporate new green design elements into older housing stock.