[Music] Lakeland Currents, your public affairs program for north central Minnesota.

Closed captioning is made possible by Bemidji Regional Airport, serving the region with daily flights to Minneapolis-St. Paul International Airport.

More information available at bemidjiairport.org.

Welcome to Lakeland Currents.

I'm your host Todd Haugen.

Our guest today is the director of Bemidji's Habitat for Humanity, her name is Geri Hickerson.

Geri, welcome to Lakeland Currents.

Thanks for having us.

You've been the director of Bemidji's Habitat for Humanity for quite some time.

We talked about this before our show, how long you've been doing this?

17 years.

Wow.

But Habitat has been in Bemidji since 1990?

Correct.

That's a long time.

A lot of hard work got done for those first few years with just volunteers.

Yeah.

What does Habitat for Humanity do?

Well so we build simple, decent, affordable homes for families who can't get financing anywhere else.

And you not only build these, you sometimes finance them or do you always finance them?

Always finance them.

So far we are looking at some other financing options for homeowners who are on the high end of the scale, who are just barely fitting into our program, who may need, you know, a bigger house or something.

We are beginning to work with rural development and so that we will build the house, we're the contractor.

We are recognized by the state of Minnesota as a licensed contractor, and so they'll finance through rural development.

We build it because we can build it cheaper than anyone else can because we have volunteer labor and don't pay that labor.

So it's an affordability gap.

So you're not giving anybody houses.

Oh no.

There's a myth that, you know, people will say oh yeah they got a Habitat house thinking that they were given that house.

Families put in 300 hours of sweat equity, building on the house, working in our Restore, doing other things, doing financial literacy, doing Home Stretch, all kinds of things.

300 hours per adult and then they have to pay a mortgage like anyone else who buys a house.

300 hours and you said per adults.

Per adult.

Kids aren't expected to participate.

Correct.

And what kinds of things can they do for that 300 hours?

Oh, well, we love that it would be construction because then they would know what's in the walls and how to maintain it, but they they're required to do Home Stretch which almost any lender will require.

It teaches you about home ownership, you know what does interest rate mean.

Of course, for us, that doesn't mean anything because our interest rate is zero but, you know, how to get financing, what to look for when you're looking for a loan, all of those things.

What does home ownership mean?

They do a financial literacy piece.

Most of them, by the time they get to us, and not always, sometimes they come with pretty bad credit.

But it teaches them beyond how do I fix my credit report to how do I now look at saving money for the future and what do I need to be aware of.

So it kind of gets their mind beyond how to live day-to-day and paycheck to paycheck.

0% interest.

Zero interest.

And what about terms?

Depending on how high the mortgage amount is and what their income is we can go 25 to our biggest loan we wrote was 40 years.

Wow.

Yeah we can go to 45.

I don't know that I'd want to pay for house for 45 years but if we need to do that to keep it at 30% of their income that's what we do.

Yeah, that's the goal.

It has to fit within 30%.

Right.

So affordability for home ownership is 30% of income.

That includes the principal payment income, interest.

We don't have interest, their escrows for insurance and taxes.

Sure.

And a utility allowance.

So 30% that's what housing is for us.

And what about your down payment?

Well that's the beauty of Habitat, our down payment is only the deed taxes and the recording fees.

Our attorney does the closing pro bono so there's, you know, for about $2,000 they can walk into the house.

Yeah.

You're not going to find a deal like that very many places.

Probably not.

Or maybe nowhere else.

No.

How does one start the qualification process?

Sure.

I mean it's scary to try thinking about buying a house, you think you're into a long-term commitment and you are and you should be.

But first step maybe check our website.

We have habitatbemidji.org.

We have a home buyer tab.

Click onto there, there's lots of information there, little short orientation video that we've put on there.

The application is online.

You can look at that.

It's a big daunting thing.

It's not easy to fill out so if you're having trouble with it or just simply don't understand what, you know, you need to do, give us a call or stop into the office.

We're over in the Industrial Park in the Restore building, 1357 Exchange Avenue.

Google finally pinned us in the right spot today.

It's amazing, after we've been there for I don't even know how many years, a lot, about 16 years we've been there, but yeah, just stop in and talk to us.

It's sometimes the easiest thing to do is just stop in.

And these purchases of these homes are for homes that are going to be owner occupied.

You don't buy one of these and then rent it out.

Correct.

Yep there are clauses in the documents that say in the mortgage and the notes that say it has to be owner occupied.

You can't rent to anybody.

If someone moves in with you, your principal payment's going to go up because your payment is based on your income and we do adjustable mortgages every year.

If your income goes up your payment's going to go up, so you're likely going to pay off, you know, earlier than the term of your mortgage.

Sure.

Can the homes be resold?

They can be.

We have a right of repurchase.

If you want to sell your house you first have to offer it back to us and if we don't want to take it back or buy it back then you can sell it on the open market and there's a shared equity clause which means whatever the appreciation is over the time that you've been in your home you'll share part of that with us.

Now the good stuff, because these homes, well there's already been plenty of good stuff I mean with the 0% interest and the little or no essentially no down payment.

How much does a home that ordinarily if you were a home, three-bedroom home that's brand new, after all is going to maybe cost on the average around this region of Minnesota $250,000, maybe.

What's that home going to cost through Habitat for Humanity?

Sure.

So our homes are appraised.

We sell at the appraised value.

It'll probably appraise at like 230.

If you qualify for the down payment assistance, which most of the homeowners/ home buyers that we have qualify, it's a 20 or $30,000 spend down.

So your original mortgage would be like 220.

Yeah.

Sometimes less.

The market with materials, we're just guessing at our prices right now on our price points.

The last few houses that we've had, that we've built, the last three have appraised right around 140.

Mortgages are like 102.

And then if you add in along with that savings, then you add in 0% interest, that home is costing you a lot less.

Right if you paid the bank back, and I'm using round numbers because it's easy for me because I'm not a numbers person.

If you buy a house from a bank at $100,000 you can expect to pay probably 280 by the time you're done paying interest.

Habitat you're going to pay back 100,000, that's it.

You pay us exactly what you borrowed from us.

The equity building for Habitat is that when you make your first payment you're building, you're building equity right away.

If you're with a bank you don't build equity for a long time, you're paying mostly interest on your every monthly payment you make you're paying interest.

So if you want to sell in 10 years, you probably don't have a lot of equity in that house.

If you're paying at Habitat for 10 years you're going to have a lot of equity in that house.

So Habitat builds good very efficient homes, right Geri?

They're maybe not necessarily extravagant but it's a brand new house and it's definitely going to be very energy efficient.

Right.

We say simple, decent, affordable.

Simple, decent doesn't mean built with cheap material.

We use quality material.

We don't use marble countertops because, you know, you might want that but you really don't need it.

Right now you need a decent place to live.

But they are very nice homes, highly energy efficient.

You know heating and electric bills are low.

You know $60 heating bill all winter long when it's 60 below.

You know $30 electric bills.

It's crazy how low and how efficient they are.

Can people have a selection of location?

We try to give families an option.

Sometimes there are certain lots that we have purchased that they have stipulations that we need to build on them within a certain number of years or if we're building two or three houses we like to keep them close together just for mechanics of things.

So we try to accommodate but sometimes we say this is, you know, these are the two options you have.

We try to look at where maybe people are working.

Do they have family in a certain area?

We try to accommodate if we can.

And Habitat is operating within access to city services in Bemidji and elsewhere in this region?

Right, so where our geographical service area where we can build is all of Clearwater and Beltrami County.

So any cities that have municipality is where we can build and we've built in Blackduck and Bagley.

Where did the lots come from?

All over.

We go to the county tax auction, we've picked up quite a few that way.

We have developers who have bought land and said hey we've decided we're not going to build there.

And so we just picked up six lots last year over in Nymore.

You know people who have adjoining lots who go I'm, you know, I don't want to pay property tax on that anymore, I don't want to mow it or upkeep it anymore, we've bought lots like that.

Houses that need to come down people will, you know, donate.

We've actually had houses and lots donated to us.

So, yeah, all kinds of ways, however we can get our hands on them.

As long as it has access to city services.

Right.

And I would assume as long as it's buildable without having to go for variances.

Right.

We have had some lots that we've had to do variances on, not a lot but we have, and the city has been accommodating because, you know, everyone knows we need affordable housing and we need housing period in this area.

So, yeah, 50 by 150 is a basic lot in the city of Bemidji, so about 6,000 square feet.

We do have some larger lots that we've picked up for families who need a bigger house.

You know sometimes you got four or five kids, you need more than 6,000 square feet to live on.

And for those that are watching our show that are in the Brainerd area, there is a program operating in Brainerd as well, but that's separate from the program you operate here Geri.

Right.

Really similar Lakes Area in Brainerd they're building in.

They actually have five counties they build in so they have a huge service area, and yeah, they're going gang busters, too.

In fact they're building in Cass Lake.

They have Cass County so they're building in Cass Lake.

So nearby.

And they have Hubbard County as well.

So, you know, we all operate the same but differently, just different areas.

So with all these great aspects of this program I would assume you have applicants that are just coming into your office every day.

That would be beautiful.

Our applications have picked up, but over Covid they just dropped off hard and even last year we were a little surprised that they weren't picking up and so we've done a lot of marketing and, you know, a lot of talking and networking to try and get apps picked up.

We have just selected one family and we have two more that are moving to called home visits.

So once they get qualified with numbers and things like that, then we look for the need thing, so ability to pay, need, and willingness to partner are our three criteria.

And so do you really do need to be, you know, buying a Habitat house and so we look at that.

So they'll move to a home visit and if they meet that qualification then they'll go to the board for approval.

So we're hoping to have three, four families ready to go next year.

Because you need, I mean you want to save these homes.

Then the great bargain that Habitat is for people that really need it right?

Right.

Because whether they apply or not it would seem there'd be a lot of people that would need a Habitat home at any given time.

Yeah, most of the time when they come to us it's first generation home buyers.

They really don't understand what home ownership is and we still have families once they get into their house that call and say hey this broke in my house and I'm like yeah I'm not your landlord.

You are the owner of this property.

You need to figure out how to fix that.

I mean we guide them and help them, you know, offer you know here's the plumber who came in and did your work call him, it's probably under warranty, those kinds of things if it's still that early.

So you know we guide them but it's hard for people who have never had, you know, people before them that have owned homes.

They think they're renters and they think someone needs to fix that for them and that's truly not the case.

So yeah it's different than renting, right?

Big time.

Yeah it's a shock.

And the work that people do, the 300 hours for each adult, what kind of work is that?

What sort of things, duties do they get?

Sure.

So up to 125 hours we don't even start talking about what a house or a lot would look like.

So they're working on the financial literacy, the Home Stretch.

They're working with a mentor.

They get a binder, you know, about 2 inches thick of everything you need to know about building a house and owning a home and, you know, what happens if I get into trouble later and I, you know, you're going to foreclose on me, all kinds of things in there.

So we try to get them set up for success.

Usually they start working in our Restore, they get to know the Habitat family and the Habitat volunteers because a lot of our volunteers in the Restore are the volunteers that are working on houses.

So they get to meet the people that are actually building their house work in our Restore.

We have mailings.

We do we get really creative sometimes about how to get families up to that 125.

But with the actual construction work they're not expected to have a great deal of technical knowledge necessarily.

Don't need to know a thing.

You know the volunteers on site will guide you and if you're and we've had people that are that have disabilities that, you know, we figure out how to get them on site even just to interact with the volunteers and see how the house is being built.

Like I said we get creative.

We do require 125 hours of construction on your own or another Habitat house, so if you're selected and we're still building a house, we encourage you to get over there and see how this is going to look when you get to that point.

Right.

Disabilities, I hadn't thought of that one.

I would assume those homes could maybe be tailored for the person's disability.

Oh for sure.

We build accessible houses if we need to.

Yeah.

Our houses are mostly slab on grade so they are age in place you know.

Most of them have a zero entry entrance, so if you're wheelchair bound you can get in there you know 36 inch doors, bathrooms big enough to turn a wheelchair, those kinds of things we've done.

A couple years ago we had a family with a child in a wheelchair and so the bathroom has a walk-in shower so that, you know, they don't have to get her in and out of a bathtub.

So Habitat builds homes, it finances homes, and it also has various ways of funding itself.

How is it supported?

So our big, you know, our biggest thing is the mortgage payments coming back in.

Those are recycled back into building the next house.

So oftentimes families, when they you know we've had a few who got behind on payments and didn't think it was a really big deal and so we have the conversation that, you know, if you're not making payments the next guy that's getting a house isn't getting a house because you haven't made your payments that's where our money comes to build those houses.

We also have the Restore which provides operating costs, pays all the salaries, the heat, the lights, the insurance, all of that and puts some money into a house every year.

That's the concept of the Restore.

Items come in donated, we sell them at, you know, half of what they would market for and it puts money in the bank for us to operate and build houses.

We have one big fundraiser a year and that's our, well we used to call it our Gala, we've just renamed it our Roof Raiser.

We'll be doing a Roof Raiser in April and so with that we raise about 30 to $40,000 a year to again put into houses.

So the Restore donations are those entirely sold?

Do those materials ever go into constructing a Habitat house?

We don't.

It's difficult unless somebody is donating a whole set of windows, brand new, that are, you know at the level that we install.

It's really difficult to use used material.

You know if someone brings in a really nice exterior door, if it's not going to match the other door, we're not going to use it.

So it's difficult.

It's just that store is more oriented to people that are doing small projects on their own home, right?

Lot of remodelers, a lot of remodelers, a lot of landlords in working you know need a door, you know, and come in and buy a door, interior doors, closet doors, all of those things.

And again, and you at the Restore you sell not only building materials but appliances and furniture.

Appliances, furniture, flooring.

We've got a new partnership with Amazon paint so all the paint in our store is now new.

It's recycled paint so if you have paint that you want to donate to us it's going to go to Amazon and they're going to recycle it into new paint.

It's a really cool deal.

And will it be reused locally or do they just they source that out all across the country?

I think all over the country but they are based down in I think it's Shakopee.

So, yep, they come up and we have our used paint.

It's in a bin and they pick it up and if we need paint we order it and I think it's $20 a gallon.

Nice paint, we use it in our Habitat houses.

Good to know.

Yeah I mean a lot of us, at least at our house, we have probably 10 gallons or not 10 gallons, but 10 cans of paint that sometimes have a fair amount of paint still in them and that can be reused.

The Restore has certain hours of the day when it's open and certain times that it accepts donations, right?

Yep.

So we're open Wednesday, Thursday, Friday from 10 to 5 and Saturday 9 to 1.

We accept donations up to a half hour before closing and then Tuesdays is for donation and pickup only.

So sometimes someone will buy something, can't pick it up that day, and if they want to pick it up during the week Tuesday is the best day for them to do that.

All right and people should donate at the appointed time and not just drop off donations at the Restore.

So I drove into the driveway this morning at work and there was a sofa sitting out back and I thought that's weird that that's sitting out there and I went and asked staff why is that sofa back there.

Oh somebody dropped it off over Thanksgiving break and you know it got wet and now we don't know what to do with it.

So somebody who thought it was a great donation and it now gets to go over to the landfill.

Ah nuts.

And that'll be an expense, I would assume.

It will.

We have to pay for that.

So I mean that sofa probably would have been a welcome donation but again you need people there.

Somebody needs to get it inside, take a look at it and get it in.

Yeah.

It's not a big problem for us once in a while we'll get those drop offs you know you'll drive up and there'll be a sink sitting outside or something and yes we do need the items but, you know, please just don't drop it there.

It's actually illegal to do that, so.

How many homes have been built by Habitat locally in all these years?

Sure.

I think we've built 52 new and we've recycled and purchased some back so we'll be writing our 61st mortgage on this house that we're just finishing up.

Boy that's a lot.

Have you had many homes where there's been a failure of the mortgage, for instance, somebody just can't make the payments or don't make the payments?

We've had one foreclosure, one of the 61.

That's really impressive.

Wasn't very fun.

I don't want to do it again.

I'm sure it wouldn't be.

Impressive.

But a skeptic might say well it just doesn't sound like a program that's going to work that well to me, I think that there will be more people that won't pay.

Yeah, we have families who get into trouble and because we are the lender we work with them.

You know we've done okay we understand that the transmission just went out of your car and now you have to pay $5,000 so you give us a plan.

So they'll write up a plan for how can I skip two payments and then tack them to the back of the mortgage.

Lots of creative ways that we've kept families in.

So if you're getting foreclosed on you really don't want to be in a Habitat house.

For people that are thinking that this might be a program that could work for me, we really need a a house, how do they start the whole process, Geri?

Sure.

Again just call the office, come over, look at the application.

We'll help you fill it out if you need help filling it out.

A lot of people say yeah my credit's not very good so I'm just not even going to try.

We're looking at applications with credit scores of 500.

They're not great credit scores, but we look at a past history of two or three years where they've cleaned a bunch of stuff up and they're showing that all of their current debt right now is current.

They're paying and they've figured out how to pay their bills.

So don't look at the credit score, look at how you're spending your money and how you're managing it and that's what we basically do.

Do they have to demonstrate that they have a good job, that they have real steady employment.

Steady employment is important.

We have several of our homeowners now are getting Social Security, so if you're on Social Security you probably will qualify.

You do have to show a steady employment.

It doesn't mean that you can't have changed jobs, but you should be going up not down.

You should be always getting a better job.

We do look at if you're shifting jobs every three months why are you doing that.

You know you're a credit risk if you don't have strong employment.

You mentioned Social Security and that makes me think gee, maybe I'm just assuming this is a program for young people.

Not that everybody on Social Security is older, but at the same time have you had people get into homes, brand new Habitat homes that are over say 60 years old?

Yeah recently several.

Really?

Yeah, we're an equal housing lender, age doesn't factor, you just have to have you know show us that you've got the means to pay a mortgage off.

And that 300 hours of sweat equity doesn't necessarily have to be heavy physical labor, right?

Right.

Yeah, again, just be there and you know lend a hand, figure out what's in your house, maintain it.

Yeah I tend to think we've talked about Habitat for a long time you and I, and I've talked with people after those shows and they say well, you know, I've never even picked up a hammer, you know, I wouldn't know the first thing to do there.

I just feel, would kind of feel kind of intimidated, but I guess your people working the program have got to be used to having people come in that maybe don't have a lot of experience, right?

Right, we have volunteers.

We have basically one site supervisor and the rest of the people there are volunteers.

They come there to work and build a house for someone because they know there's no other way they're going to get one.

So, you know, they'll teach you how to do that.

If you're not interested in construction at all there are other things to do there.

You can carry a board over, you can stack lumber, you can do, you know, clean up.

There's lots of stuff to do on site.

And the rest of the people working, these experienced workers that are actually doing most of the building, are they volunteers?

Most of the framing and stuff is volunteers.

Our volunteers, we have a crew of about five to six guys who have been with us for a few years now, They lay the flooring, they install the cabinets, countertop.

You know HVAC, plumbing, electrical that's all subbed out to the professionals.

We don't want to be doing that stuff.

But for the most part our volunteers are doing everything.

Wow.

Are you in need of more qualified volunteers?

Always.

You know the average age of our volunteer on site is 65, you know, and we have some that are way older than 65, so we're always looking for younger people.

We are getting close to the end of our show for today, Geri.

How many homes do you plan to build next summer?

Well we have one right now in hand that we're going to rehab if we can get a family that's interested in and wants to buy it.

And we're hoping to maybe do two more.

So two to three houses next summer is kind of going to be our goal.

Do you have applicants lined up for those?

We do.

Okay.

Yeah.

And the summer after though there will be more homes constructed.

And we need applicants.

So it's never too early.

It's never too early.

You know building a home is a process.

You know we have people who call and say, you know I'm homeless and I'm desperate and we're like we're not the program.

We can't.

It's not so immediate.

Yeah it's 18 to two year, 18 month to two year process and people get frustrated with that but anyone who knows if you're building a house you're not going to do that, you're not going to get through that process quickly, even if you're going through a bank or doing something else.

So the home was built to suit your family and it takes a while.

We've had families get in as quick as a year.

Right.

Yeah.

But it's never too early to start the process.

It's a good time to learn more about it and submit the application, right?

Can people call and talk with someone in your office just to get more information?

Yep there's three of us.

I got a couple part-time in the front office and myself.

Just give us a call, ask questions if you're curious.

Again an orientation video is on the our website.

habitatbemidji.org.

Click the home buyer tab.

There's a video there, the application's online.

Take a peek at those things, give us a call, come in, we'll sit down with you and talk you through the process.

Geri Hickerson, the director of Habitat for Humanity locally, thank you for joining us for our Lakeland Currents show today.

You're welcome.

That's our edition of Lakeland Currents.

I'm your host Todd Haugen.

Thanks for watching.