Community Dividend

Homeownership initiative targets Minnesota's emerging markets

The State of Minnesota Emerging Markets Homeownership Initiative is charged with developing a business plan for dramatically reducing the state's homeownership gap by 2010.

Jacqueline King | Vice President

Published May 1, 2005  | May 2005 issue

The benefits of homeownership are widely known and recognized. Owning a home is often referred to as the American Dream; it is the primary wealth-building tool for most Americans and contributes to stronger, more stable families and communities.

For many years, Minnesota has been a national leader in the percentage of residents who own homes. As of year-end 2002, Minnesota's homeownership rate of 77 percent was the highest in the country. While this figure represents a 78 percent homeownership rate for whites, the homeownership rate for minorities in the state is only 41 percent. (See Figures 1 and 2 for Minnesota homeownership rates by ethnic group.)

Given the continued growth in the state's minority population, Minnesota's wide homeownership gap is of increasing concern for business, community and political leaders. Recently, many of their organizations began developing strategies and programs aimed at closing the homeownership gap. In the process, they came to recognize the need for a comprehensive, multifaceted, statewide approach.

In early 2004, three organizations with a strong interest in the achievement and retention of homeownership in Minnesota—the Minnesota Housing Finance Agency (MHFA), Fannie Mae and the Federal Reserve Bank of Minneapolis—convened the Emerging Markets Homeownership Initiative (EMHI). The purpose of EMHI is to develop a business plan for dramatically reducing the state's homeownership gap by 2010. The role of the three conveners is to work with private- and public-sector leaders across the state to develop and implement the plan.

In remarks delivered at a kickoff ceremony in June 2004, Minnesota Governor Tim Pawlenty stressed the importance of homeownership for Minnesotans and the unacceptability of the current gap in the homeownership rate. Additional speakers at the kickoff included MHFA Commissioner Tim Marx, Minneapolis City Council Member Don Samuels, Minnesota State Senator Mee Moua, Neighborhood Development Alliance Associate Director Maritza Mariani, Fannie Mae Vice President Shalley A. Jones, and Minneapolis Fed officers Niel Willardson and Richard M. Todd. (Todd's remarks, which focus on the factors behind Minnesota's homeownership gap, are featured in this issue.)

The participants

As a first step, the conveners invited representatives of nearly 50 housing and community organizations and financial institutions to help identify homebuying barriers and develop strategies for reducing the homeownership gap. The participants were divided into two groups: the committee and the advisory group.

The committee consists of organizations that have principal roles in the home-purchase process. This group includes lenders, who provide mortgage funds and establish lending criteria; realtors, who serve as the key providers of information related to selecting and acquiring a home; and pre- and post-purchase counselors, who help buyers determine if they are financially prepared for acquiring and maintaining a home. The advisory group consists of more than 40 organizations that have a stake in the homebuying industry, including insurers, businesses and community organizations. Many advisory group representatives are members of racial or ethnic minority communities and work directly with the potential homebuyers that EMHI seeks to reach. These representatives played a key role in identifying barriers that people of color face during the homebuying process.

The process

The committee and advisory group met separately on a monthly basis at the start of the initiative, then held a series of joint meetings. To help the two groups expand their understanding of the issues facing emerging market populations, the conveners reviewed existing research on homeownership and emerging markets and presented these findings to the participants. The literature review focused on factors that influence a potential homebuyer's decision to purchase a home or continue renting, such as marital status, age, and immigration status.

The conveners also sponsored information sessions for committee and advisory group members that focused on the homebuying process, foreclosure prevention, housing attitudes and more.

To ensure that as many people as possible had an opportunity to participate in and contribute to EMHI, the conveners sponsored a series of focus groups, listening sessions and other community meetings. Focus groups were held in 10 different locations in the Twin Cities and greater Minnesota during October and November. Some of the meetings were industry-specific, to allow EMHI conveners to gather information from groups like loan originators or real estate professionals. Others were conducted with specific emerging market communities, such as African Americans, Native Americans, Latinos, Hmongs and new immigrants.

Three listening sessions were held across the state in October. The sessions were conducted to obtain information and feedback from interested stakeholders who do not serve on the committee or advisory group. Members of the public were also invited to attend.

The barriers

The literature review, focus groups, listening sessions and other meetings all served to identify a list of homeownership barriers for the EMHI business plan to address.

Financial obstacles are one of the major barriers. Many would-be homebuyers from emerging market groups do not have the savings to cover a down payment or lack sufficient income to qualify for a loan and make monthly mortgage payments. Although there are several down payment assistance programs available in the state, they do not have enough funds to meet demand.

The complexities of the homebuying process are also a barrier. Credit and lending practices can seem burdensome and complicated to potential borrowers, and the perceived difficulty may be compounded by cultural and language differences. For example, the volume of documents involved in a mortgage transaction may seem overwhelming, especially to borrowers who use English as a second language.

Another barrier, identified by the focus groups, is a lack of cultural sensitivity on the part of some housing and financial professionals, in both their marketing materials and treatment of potential borrowers. Also, racial discrimination was frequently identified as a critical issue. In an effort to help others understand the dynamics involved, EMHI conveners held separate meetings and information sessions on race relations.

Some of the identified barriers are community-specific. Native Americans noted continuing challenges in accessing mortgage products for homes that are located on trust land. The uniqueness of each tribe's rules regarding trust land makes it difficult to develop standardized products. Native Americans also discussed the lack of a resale market in many tribal communities.

Many recent African immigrants who are Muslim emphasized their aversion to interest payments, which stems from Islamic principles. They expressed a preference for operating on a cash basis and not incurring credit obligations that could burden family members and future generations.

Participants in the African American focus group discussed their history of being denied access to employment, wealth-building tools and banking relationships. Hispanics discussed how the fear of unstable employment is a deterrent to taking on mortgage debt. Hmong focus group participants revealed that while they have had success achieving homeownership through a collective, pooled-income approach, they would welcome more information about available homebuying resources for individual families.

Strategies and next steps

Following the information-gathering phase and identification of barriers, the conveners, committee and advisory group worked collectively to identify potential strategies to include in the business plan. All strategies must be achievable and measurable. As of early 2005, EMHI participants were developing the measures that will be established under each strategy. They were also identifying the organizations that are best suited to take leadership roles in creating timelines, designing accountability measures and ensuring that the strategies are implemented.

The EMHI business plan, which will feature the strategies, implementation timeline and success measures, will be delivered to Governor Pawlenty this June.

For more information about EMHI, visit

EMHI participants


Fannie Mae
Federal Reserve Bank of Minneapolis
Minnesota Housing Finance Agency

Honorary conveners

Helen Blue-Redner, Upper Sioux Community
Maritza Mariani, Neighborhood Development Alliance
Mee Moua, Minnesota State Senate
Don Samuels, Minneapolis City Council


At-large membership:

  • Bremer Bank*
  • TCF Bank*
  • US Bank*
  • Wells Fargo*

Home Ownership Center
Independent Community Bankers of Minnesota
Minnesota Association of Mortgage Brokers
Minnesota Association of Realtors
Minnesota Bankers Association
Mortgage Association of Minnesota

Advisory group

African American Family Services
African Development Center
American Indian OIC
Bremer Foundation
Builders Outreach Foundation
Center for Asians and Pacific Islanders
Chicanos Latinos Unidos En Servicio
City of Minneapolis
City of St. Paul
Cross Cultural Home Ownership Alliance
Don't Borrow Trouble
Duluth Local Initiatives Support Corporation
Family Housing Fund
First Homes
Freddie Mac
Greater Minnesota Housing Fund
Greater Twin Cities United Way
Habitat for Humanity (Minnesota)
Hmong American Partnership
Joint Religious Legislative Coalition
Metropolitan Alliance of Community Centers
Metropolitan Council
Mille Lacs Indian Housing Authority
Minneapolis Area Association of Realtors
Minneapolis Public Housing Authority
Minneapolis Urban League
Minnesota Coalition of Community Land Trusts
Minnesota Credit Union Network
Minnesota Housing Partnership
Minnesota Manufactured Housing Association
Mortgage Guaranty Insurance Company
Multicultural Network of Real Estate Professionals
National Association of Housing and Redevelopment Officials (Minnesota)
Pohlad Family Foundation
St. Paul Area Association of Realtors
St. Paul Urban League
Twin Cities Local Initiatives Support Corporation
United Migrant Opportunity Services, Inc.
USDA Rural Development
U.S. Department of Housing and Urban Development

*Also a member of the advisory group.