Housing equity and the homeownership gap between white households and households of color is a huge issue in Minnesota; and economic downturn caused by COVID-19 has potential to exacerbate this issue. Tunheim is proud to partner with the Minnesota Homeownership Center as they work toward preventing foreclosures and promote homeownership for all Minnesotans. We checked in with Minnesota Homeownership Center’s president, Julie Gugin, to get the basics on housing equity and the state’s current economic conditions.
Tell us a little about the Minnesota Homeownership Center and what your top priorities are right now.
The Minnesota Homeownership Center is a nonprofit working to promote and advance successful homeownership in Minnesota, with an emphasis on serving those facing the greatest barriers to homeownership: lower income households and communities of color. Due to the pandemic’s sudden and devastating impact on the U.S. economy, our top priority right now is working with struggling homeowners to help them to avoid mortgage default and retain their hard-earned investment during this difficult time. We’re very busy ramping up our default prevention services to facilitate a quick response to the increase in mortgage defaults we are likely to see beginning in the next few months. The fact is, households of color still have not gained back the ground they lost in ownership during the 2008-2009 foreclosure crisis. We are committed to avoiding a repeat of this tragedy. We cannot afford to lose any more ground in the fight to reduce Minnesota’s nearly 40% homeownership gap between white households and households of color!
Are current economic conditions cause for concern for homeowners?
It’s definitely a difficult time for many Minnesota homeowners. Certain professions disappeared overnight in mid-March, and they still haven’t started up again. Many such jobs may be gone forever. While our unemployment system has stepped up its support in response, this relief is only temporary, and executive orders to delay foreclosure proceedings will likely expire soon. Our fear is that we will see a dramatic uptick in the foreclosure process starts over the next few months, regardless of whether the economy begins to rebound.
How has economic downturn impacted Minnesota homeowners in the past?
The 2008 foreclosure crisis was nothing short of a disaster for thousands of Minnesota families. The mortgage system was not set up to facilitate working with struggling homeowners to help them retain their investments; 3.1 million foreclosures filings occurred in 2008 alone – that represented almost one in every 50 homeowner households in America.
What resources are available for Minnesotans who are unable to pay their mortgage or concerned about losing their homes?
The Minnesota Homeownership Center and its nonprofit and community-based partners around the state can help struggling homeowners to navigate their situation and potential relief options for free. We helped more than 37,000 homeowners avoid foreclosure during the Great Recession, and we’re ready to help even more Minnesotans this time around. One piece of good news here is the fact that lenders are much more willing and prepared to work with owners to avoid foreclosure. The biggest lesson of the last housing crisis was that foreclosure isn’t good for lenders either. There will be a lot of struggling homeowners in coming months, but my hope is we’re all in a much better position to keep people in their homes this time around.
What is your #1 piece of advice for Minnesota homeowners right now? How about for someone considering buying a home?
For homeowners, my advice is to pay your mortgage if you are able. The help that’s currently available, such as forbearance, is great for those who need it. It is not great for those who do not. Any payments delayed will eventually have to be paid, and likely with additional interest due to the added time borrowing the funds. If you do need help, or foresee needing help, reach out to your loan servicer proactively to discuss your options. None of the programs out there designed to help homeowners is automatic. Skipping a payment without connecting with your mortgage company will negatively impact your credit record and cause fees to accrue. It’s also important to act early, as that’s when you’ll have the most options for relief available to you. One of our default prevention advisors can walk you through all of this complicated work.
On the home purchasing side, it’s actually a good time to buy if you’re in a position to be able to do so. Interest rates are at historic lows and the housing market is stable, pricewise. The best first step here is to connect with one of our homeownership advisors to explore things like potential down payment assistance and how much of a loan you might qualify for. Then take the Home Stretch homebuyer education class to learn how the process works and what you can expect as a homeowner compared to a renter. Owning one’s own home is the number one way that individuals and families build wealth in this country, and that’s not about to change. Ownership is an investment in yourself and in your community and can even end up costing you less than renting depending on where you want to live.