Northwestern Mutual Contributes $3 Million To Home Ownership Efforts

Mayor Cavalier Johnson, in December 2022, poses with the Milwaukee Community Land Trust board outside the nonprofit’s first home, 2025 S. 25th St. Photo by Jeramey Jannene.

Northwestern Mutual will contribute $3 million to two Milwaukee homeownership initiatives.

The insurance company will contribute $2.5 million to the Milwaukee Community Land Trust as a low-interest loan. It will also donate $500,000 to Acts Housing‘s homeownership acquisition fund.

Both initiatives aim to increase the supply of affordable housing for lower-income owner-occupants in Milwaukee.

“As a financial services company, we recognize our responsibility to support and add economic value to our communities,” said Grady Crosby, NM vice president and chief sustainability and impact officer, in a statement. “By leveraging our expertise and working directly with local residents and partners, we’re helping to create a pipeline to homeowners that makes housing more affordable and gives residents a stake in their properties for generations to come.”

In December, the nonprofit land trust unveiled its first “affordable forever” home. It aims to have 50 such homes by 2025.

The land trust model works by splitting the ownership of the house and the underlying land. A house is to be sold at a below-market rate to a low-income family, with the community land trust maintaining ownership of the land and leasing it to the homeowner. A public or private subsidy is used to fill the gap to acquire and renovate the home, with the purchasing family agreeing that any future sale would take place at a reduced price. Upon a future sale, the seller would be allowed to realize a 1.25% per year appreciation plus the portion of the mortgage equity they have paid down.

The acquisition fund, launched in August 2022, is focused on making sure low-to-moderate-income Milwaukee residents – not out-of-state investors – are the ones buying homes in the city. It is intended to buy bundles of homes, including in off-market transactions, from landlords and other bulk sellers.

The fund was one of several strategies identified in the Community Development Alliance‘s initial planning and analysis effort. The study found the need to create 32,000 new Black and Latino homeowners over 30 years to address racial disparities.

The development alliance hopes to create an inventory of homes with prices between $90,000 to $140,000 and resulting monthly housing costs of $900 to $1,200. The intended goal is to create homeownership opportunities for individuals making less than $25 per hour. The acquisition fund aims to acquire 100 homes per year.

Based on U.S. Census data, Milwaukee has the second-lowest Black homeownership rate of major cities. A reported 56% of white households own their homes, but Latino homeownership is 38% and Black homeownership is only 27%.

“Milwaukee is unique compared to other cities with a stark racial inequity in homeownership,” said Lamont Davis, land trust executive director.

“In Milwaukee, families of low-to-moderate income are increasingly rent burdened and forced to make decisions that limit their ability for upward mobility,” said Dorothy York, vice president, real estate at Acts Housing.

The acquisition fund launched with $1 million from the Zilber Family Foundation and has also received $1.25 million in funding from the City of Milwaukee’s Housing Trust Fund and $2 million from Wells Fargo bank. It has an $11 million goal, with $1 million of it to pay for operational expenses.

“Homeownership is strongly tied to economic empowerment, financial security and community development,” said Steve Radke, president of the Northwestern Mutual Foundation. “Research has found that stable housing can improve education dropout rates, economic vitality and health, as well as reduce crime. As a company, we firmly believe that helping residents access fair and sustained homeownership opportunities is an important means to helping close the racial wealth gap, and we are grateful to our partners for helping us tackle this generational issue.”

The donations are part of the company’s Sustained Action for Racial Equity initiative.

Northwestern Mutual, which is undertaking a $500 million project to improve its downtown campus, has previously donated more than $15 million to neighborhood improvement and economic empowerment programs in the Amani, Metcalfe Park and Muskego Way neighborhoods.

UPDATE: An earlier version of this article referred to the land trust contribution as a donation.