1. Emerging Markets Homeownership Initiative Committee Meeting: Homeownership Barriers Part II September 29, 2004

2. 2 Committee Meeting Agenda Meeting 1 Recap & Convener Analysis Initiative Updates Data Analysis Consumer Survey Homeownership Barrier Impact Discussion

3. 3 Meeting 1 Recap: Homeownership Barriers Quantifiable/Unquantifiable Determinants of the Homeownership Decision Demographics Dual asset and income constraints Credit quality Cultural factors and preferences, mindset Discrimination Other (information gaps, supply, etc.)

4. 4 Meeting 1 Recap cont. Advisory Group/Committee Input Convener Analysis of Actionable & Achievable Elements 6 Focus Areas for Barrier Analysis Work Groups Additional Data Elements Focus Group Selection

5. 5 Initiative Updates Focus Groups 2 Industry Focus Groups Lenders Real estate professionals 8 Consumer Focus Groups African and African American Asian (Hmong-focused) Hispanic (Spanish-speaking) Native American (urban and rural) Greater MN (urban and rural)

6. 6 Initiative Updates cont. Public Listening Sessions Scheduled Duluth, Oct. 13 th 10:00 a.m. to Noon Metro, Oct. 15 th 9:00 a.m. to 11:00 a.m. Rochester, Oct. 19 th 10:00 a.m. to Noon Spread the Word

7. 7 Initiative Updates cont. Forum on Race and Public Policy Co-Sponsored by EMHI Conveners & the Citizens League Details October 14, 4:30 p.m. to 6:30 p.m. Plymouth Christian Youth Center Alternative School and Neighborhood Center 2021 West Broadway Avenue, Minneapolis

8. 8 Data Analysis Emerging Market HO rates by age by income Supply analysis (MLS listings) HMDA analysis (denials) Final qualitative interview report on homeownership barriers Consumer survey: desire, knowledge, etc. (Fannie Mae)

9. 9 Data Analysis Population Projections? Other Data Elements of Interest Migration Foreign Born Population in the Twin Cities Emerging Market Population in the Twin Cities (maps) EMHI Bibliography

10. 10 HO Rates: Race, Age and Income Rates increase by age and income for all racial/ethnic groups Minority rates lag white rates at all age and income levels

11. 11 Homeownership Rates $20,000 and Under

12. 12 Homeownership Rates $20,000 to $40,000

13. 13 Homeownership Rates $40,000 to $60,000

14. 14 Homeownership Rates $60,000 to $80,000

15. 15 Supply of For-Sale Units Methodology Average household size Results

16. 16 Average Household Size Source: U.S. Bureau of the Census, 2000 and MHFA staff tabulations.

17. 17 Supply Analysis (MLS Listings) Unit Size = 3 Bedrooms or More Source: Edina Realty Web Site, MLS Listings, September 15, 2004; U.S. Dept. of Housing and Urban Development; Wells Fargo Home Mortgage conventional interest rate information on Sept. 15, 2004; and MHFA staff tabulations.

18. 18 Home Mortgage Disclosure Act Analysis (2003) HMDA is an indicator of lending activity, not a census 2003 data released in August 8,121 financial institutions nationally reported mortgage lending transactions Home purchase Home improvement Loan originations Loan purchase Loan application Source: Federal Financial Institutions Examination Council. Reports – Nationwide Summary Statistics for 2003 HMDA Data. Fact Sheet.

19. 19 HMDA Analysis cont. 42 million loans reported nationally in 2003 Increase in home purchase lending nationally (2002-2003) Asians, up 16% Hispanics, up 18% African Americans, up 15% Whites, up 11% Native Americans, down 5% Source: Federal Financial Institutions Examination Council. 2003 HMDA Press Release.

20. 20 HMDA Analysis cont. Denial rates (14%) unchanged from 2002-2003 Number of home purchase loans to those at < 80% AMI experienced the most increase (1993-2003) Source: Federal Financial Institutions Examination Council. 2003 HMDA Press Release.

21. 21 Minneapolis-St. Paul MSA HMDA Results Home Purchase Trends, 2003 Loan originated = 60% Purchased = 21% Denied = 7% Approved, not accepted = 5% Withdrawn = 6% Closed = 1% Source: Federal Reserve Bank of Minneapolis. Home Mortgage Disclosure Act (HMDA), 2003.

22. 22 Application Trends Over Time

23. 23 Minneapolis-St. Paul MSA HMDA Results Home Purchase Denials, 2003 All Applicants7% American Indian14% Asian or Pacific Islander11% Black16% Hispanic13% White6% Other10% Information Not Provided11% Source: Federal Reserve Bank of Minneapolis. Home Mortgage Disclosure Act (HMDA), 2003.

24. 24 Home Purchase Denials

25. 25 Approvals/Denials by Race and Income in the Mpls-St. Paul MSA Income Range All Income Levels Less than 50% 50-79% 80-99% 100-119% 120% + % of Denials 6.3% to 16.0% 11.8% to 31.4% 6.7% to 14.9% 4.8% to 14.2% 2.5% to 16.2% 4.5% to 17.0% Source: Federal Reserve Bank of Minneapolis. Home Mortgage Disclosure Act (HMDA), 2003.

26. 26 Originations and Denials Over Time

27. 27 Final Qualitative Interview Report: Homeownership Barriers Methodology 92% of AG and Committee Members Interviewed 60 Interviews Completed Frequency Tabulations Results Align with lit review & quantitative analysis Significant opportunity for improving the HO rate

28. 28 Final Qualitative Interview Report: Homeownership Barriers 1. Mindset/Cultural Factors 2. Info gaps & sophistication of HO process 3. Wealth/Income 4. Comfort with, trust in and quality of hsg mkt agents 5. Credit 6. Treatment by hsg mkt agents and others 7. Systems 8. Supply side factors 9. Language 10. Products and underwriting 11. Education 12. Mobility/demographic change 13. Other

29. 29 Conclusions—New Data Emerging Market HO rates lag at all age and income levels Sophisticated analysis of supply and EM population concentration is warranted Credit quality and consumer confidence are significant barriers to Homeownership