By Joseph Lindberg
A local nonprofit is attacking a statewide problem: The staggering home ownership gap between whites and minority populations.
And four years in, it’s starting to make strides — especially in Faribault’s burgeoning Somali population.
“It’s a start,” said Umbelina Cremer, emerging market officer at Three Rivers Community Action. “If nobody helps them, they won’t be able to establish themselves. And to better ourselves, we need to help our communities.”
Three Rivers Community Action Inc. operates programs for homebuyer assistance and pioneered an emerging markets home ownership initiative aimed at closing the chasm between white and minority homebuying.
Based on a mixture of census data from 2000 and American Community Survey information from 2009, Minnesota has the highest overall home
ownership rate in the nation at more than 73 percent — but one of the worst emerging market rates at 43 percent.
It also owns the fifth largest gap between those two home ownership rates, according to census data.
Data from the 2010 census will likely be released this year.
“When we first started, there was a huge need, but very few were ready,” Cremer said. “Now with three years invested, people are ready to buy, and they understand why.”
The education element to the emerging market initiative is crucial. Three Rivers organizes and directs regular educational classes on homebuying for those new to the country, usually from more diverse populations with considerable language and cultural differences.
Classes are eight hours long — sometimes multiple sessions lasting a total of 12 hours, depending on who is interested — and cover the entire range of elements involved in homebuying and home ownership.
That includes everything from credit to taxes to upkeep and the benefits involved in owning a home. But it is also a gut-check for many: Homebuying is only recommended to those with steady incomes and the access to support networks.
“It’s very good information, because it’s a complicated process,” said Ashir Ali, president and executive director of Somali Community Services in Faribault. He said dozens of Somalis have benefited from the information.
“It’s a good time to buy a home, but it’s important to do it right. It’s how we can get (invested) in the community.”
Cultural barriers
But for Somalis to get invested, they need to align standard homebuying practices — which usually involve loans with interest — with Islamic code that prevents it, known as riba.
“With our religion, there is no interest,” said Ali. “But they set up a system that allows a different type of payment, and that is helping us (a lot).”
Another arm of the emerging markets initiative involves connecting those who are ready for home ownership with loan programs that mesh with their religious beliefs.
Three Rivers is partnering with regional banks that offer Sharia-friendly, essentially Islamic law compliant, buying programs. What’s more, those programs can be layered with Three River’s down payment assistance programs.
“It’s helping families find resources, and we make sure those resources are good for them,” said Cremer. She said payment plans are vetted to make sure they’re affordable over the long haul for families who buy homes.
“Just because a program exists doesn’t mean it’s the best one for them,” she said.
Connecting Faribault’s Somali families with the resources to tap into home ownership is beneficial to the local economy and community, Ali said.
“We want to be here, and buying homes is how we can show that,” he said.
How the Ijara program works:
Ijara is one of three Islamic methods that can be used to buy or refinance a home while avoiding riba. Riba — essentially usury, or making money from interest — is forbidden under Islamic jurisprudence.
Here’s how it works:
The system runs heavily on a program of lease followed by acquisition. Someone selects a property and an independent trust buys the property. Then that trust “rents” the property back to the buyer until total payments equal the original purchase price.
Buyers can still accrue equity. The original purchase price is not adjusted over the life of the lease, and penalties are not charged for making larger or earlier payments towards that purchase price — early payments can help end the lease earlier.
Participants are still eligible for tax deductions and profits from the property still belong to the buyer. According to ijaraloans.com, monthly cost of Ijara financing is competitive with traditional home financing, and rents can be fixed from one year and five year to more common 30 or 40 year terms.
Contact:
Interested in homebuying classes? Assistance with home ownership? Contact Umbelina Cremer, Emerging Markets Officer at Three Rivers Community Action umbelina.cremer@threeriverscap.org
— Joseph Lindberg covers the city and county for the Daily News. He may be reached at 333-3135. Or at Twitter.com @JosephLindberg
Source: Faribault Daily News
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