MANSFIELD -- Nichole Hamilton has lived in her house for almost six years. It’s the only home her three youngest children can remember.
So when she found out her landlord was selling the property, she was nervous about what the future held.
“I was like ‘Oh my gosh, what am I going to do?” Hamilton recalled. “I’ve lived in this house for almost six years. I didn’t want to pack up and go.”
Fortunately, Hamilton found herself in a unique situation. The couple that bought her home wanted to help her buy it.
Edward Akinyemi is an avid financial literacy advocate and former NECIC staffer. Andrea Mauk is a social worker.
The couple recently founded Demeter’s Developments, a business that offers rent-to-own programs to individuals receiving Section 8 housing assistance.
They hope the socially-conscious business model will help promote financial literacy and empowerment for clients in the community.
“Our aim is to turn a Section 8 tenant into a homeowner within a year, ideally while they learn financial literacy and how to be a homeowner,” Akinyemi said. “We also want to show that you can do good while still making a profit.”
Under the Demeter’s model, tenants will save for a down payment, receive personal finance training and buy the home from Demeter's after a year.
Clients will continue to rent the home from Demeter's for about 12 months. The company will set aside part of each rent payment, accruing one thousand dollars to give back to the tenant. The tenant will also receive a $2,000 match from Demeter’s.
Lastly, clients will apply for a $5,000 Welcome Home Grant. Welcome Home grants are available through any financial institution that is a participating member of the Federal Home Loan Bank, such as Mechanics Bank.
Hamilton, a single mom of five kids, said the program has relieved a lot of stress.
“I know that when I graduated high school I didn’t expect to be renting for 25 years," Hamilton said. "I wanted to purchase a house. I can’t wait to say it’s mine.”
Akinyemi and Mauk founded Demeter’s with their own funds, along with a grant administered through the City of Mansfield's Community Development and Housing department.
Demeter's Developments received $35,000 from the city's HOME Investments Partnership Program funding, Director Adrian Ackerman said. HOME funds come from the U.S. Department of Housing and Urban Development.
"Demeter's particular application was a unique approach to creating homeowners and that was what was intriguing," Ackerman said.
Ackerman said when more residents own their home, the community benefits.
“Statistically, homeowners will take better care of their properties than they will of someone else’s,” she said.
By creating more homeowners, the program will also free up Section 8 vouchers for other low income individuals.
Some rent-to-own programs have made headlines for predatory practices, but HUD funding comes with conditions that prevent this, Ackerman said.
"Certain rules that don’t allow them to be predatory within the program," Ackerman said. "They are limited in what they are allowed to charge in rent."
Demeter's clients are also required to participate in free financial and homeownership counseling from a HUD-certified instructor.
Akinyemi and Mauk believe this essential because barriers to homeownership can be mental as well as financial
“I think people who are wealthy or who have money have been taught that it's okay to talk about money. Usually people who are middle class and in poverty, it's not common that people talk about money,” Mauk said. “In order to educate or to be able to look at something and how we can fix it, we have to be able to talk about it.”
Mauk said that in today’s economy, renting a home often costs more than a monthly mortgage payment. But a lack of confidence or financial know-how can make homeownership feel unattainable, so tenants continue renting even as prices rise.
“I myself have been a renter, who has had inflated prices, who at one point was low income,” she said. “I didn't really know what it took to purchase a home. I just made this assumption that you had to be wealthy to buy a home, which isn’t true.”
The couple hopes that the creating a pathway to homeownership will help fight generational poverty and improve Mansfield as a whole.
“Simply by owning a home and being able to have that equity or to pass it down to your children is a big deal for first-time home homeowners," Mauk said.
“If you want to revitalize Mansfield, we have to start with the people that live there," she added. "Your community is only as good as your local citizens and if you're not starting a revitalization from the citizens that live here, then what are we revitalizing? Are we revitalizing buildings or are we revitalizing people’s lives?”
Ackerman said she hopes the partnership between the city and Demeter's can continue long-term. “I think their hearts are really into the program," she said. "They have a desire to help people.”
While Demeter's Developments is a for-profit, Akinyemi said he was partly inspired by a non-profit initiative in Oregon.
The Oregon IDA Initiative was created by the Oregon State Legislature in 1999. The tax credit-funded program allows Oregon residents with low incomes to start individual development accounts (IDAs). IDAs are matched savings accounts for a specific asset, such as a home, education loan or micro business.
Like Demeter's, the Oregon IDA Initiative requires savers to complete a financial education course. IDA holders, or savers, are also required to develop a savings plan agreement with the provider. The plan outlines what an IDA holder plans to save for and how much they will save over a designated period of time.
The program is administered by Neighborhood Partnerships, a nonprofit organization, in partnership with between 60 and 70 local community-based organizations.
After developing a plan, the saver opens a joint savings account with the partner organization at a local bank. Savers then begin depositing their savings contributions. Neighborhood Partnerships tracks the accounts and puts matching funds in a designated account after each deposit.
In order to be eligible, IDA holders must make 80 percent or less of the area's median household income or make 200 percent or less of the federal poverty guidelines.
There is also a maximum net worth allowance of $20,000, but it excludes a first home, first car and retirement savings.
"Seventy five percent of our savers have less than $10,000 net worth," said Holly McGuire, director of economic opportunity at Neighborhood Partnerships.
After the IDA holder meets their savings goal, the provider writes a check or money order. The funds don’t go to the saver; instead they are transferred directly to the home seller, educational institution or other asset vendor.
The Ohio Community Development Corporations (CDC) Association also runs an IDA program. The program was financed for about 25 years with federal Assets for Independence (AFI) funds. After AFI funding was cut, the organization reorganized its resources to keep the IDA program going.
Executive Director Nathan Coffman said IDA programs tend to be effective. Education IDA holders tend to have higher graduation rates and less student debts. Those who purchase a home with an IDA are four times less likely to foreclose.
“It’s a proven model,” Coffman said. “It's very successful in uplifting people and empowering people and changing behavior.”
The percentage of people who reach their asset goal through Oregon’s IDA program is more than 80 percent. Some assets have higher success rates than others; home ownership tends to be lower.
McGuire said that some home savers switch to a different asset because of Oregon’s lack of housing supply. This has given a slight boost to the program’s overall success rate.
"The idea behind the IDA is that it's not just an income issue when we're looking at poverty," McGuire said. "A lack of generational or family wealth makes it very difficult to build wealth. You can't buy a house, you can't start a retirement account without a stake."
"We've helped people buy a lot of houses, go to school, start a lot of businesses."