An uneven pandemic recovery, along with inflation, is fueling concern about foreclosure activity.
In Minnesota, there is a push to ensure households of color do not suffer the same fate as they did after the 2008 housing crisis. Nonprofits providing housing assistance say the crisis had a devastating effect on Black neighborhoods in particular.
Catrice Williams, director of wealth development for the Urban League Twin Cities, said it was felt in such places as North Minneapolis and East St. Paul, and widened homeownership disparities in the region.
“Even though the homeownership gap was quite large then, it was not as large as it is today,” Williams pointed out. “That, I believe, is a direct result of that foreclosure crisis.”
The homeownership rate for Black Minnesotans is now about 50 percentage points lower than it is for White residents. To help at-risk neighborhoods, the Urban League, along with groups like the Minnesota Homeownership Center, provide free financial counseling and wealth-building tools. The League also is developing a land trust to help more Black residents afford homes amid higher costs.
Bill Gray, director of stakeholder relations for the Minnesota Homeownership Center, said promoting such efforts in affected areas will hopefully prevent foreclosure spikes. Looking back on 2008, he recalled the market pushed many BIPOC households into unconventional loans. And today, he pointed to the onset of the pandemic, and its ripple effects on income.
“During COVID, we saw a greater impact on BIPOC households because they were more likely to have those jobs that were lower wages and public-facing,” Gray noted. “And so, they were impacted by the dangers of COVID, more than other households.”
Gray added dispelling myths about homeownership also can help close the growing gap in Minnesota, suggesting it is not entirely out of reach, as some might think.
“The fact is, if you’re paying full market rent, you can probably afford a mortgage,” Gray stated. “It’s just qualifying for that mortgage.”
Both organizations say their programs can help navigate qualification barriers, such as low credit scores. They agree doing this work can help to end generational wealth disparities in Minnesota, too.
Mike Moen is a writer for the Minnesota News Connection.