Step One, Build Credit for Leech Lake Members. Step Two, Build Houses for Them to Buy.

Leech Lake Financial Services (LLFS), a community development financial institution, helps members of the Leech Lake Band of Ojibwe and other local residents build credit scores by offering personal loans that use the vacation time they’ve built up at work as collateral.

As people repay their loans, LLFS tells borrowers’ employers to restore their vacation hours or paid time off. No one wants to lose their PTO, so they pay off their loans. In the process, their faithful loan repayment builds a credit score that banks and other lenders look upon favorably.

Hundreds of Leech Lake tribal members have gone through the LLFS credit-building program — only to then encounter the record shortage of homes that vexes the entire state of Minnesota.

As a result, LLFS in 2024 started building and rehabbing homes on the reservation, which stretches across four counties and 1,300 square miles between Bemidji and Grand Rapids, including about 400 square miles of lakes.

The firm has been helped by funds and advice from the Greater Minnesota Housing Fund, Minnesota Housing Partnership, and the Minnesota Housing Finance Agency.

LLFS has built two houses from scratch and remodeled three others so far. All five sold at market rates with mortgages provided by local banks. All the buyers went through LLFS’ credit-building program and another course on home financing and ownership.

LLFS has another 15 new and remodeled house projects in the works that it hopes to complete in 2026 and 2027.

“But the need, depending on which report you look at, is up to 4,000 new houses are needed in this entire area,” said Rob Aitken, the executive director of Leech Lake Financial Services.

The LLFS development project grew out of a meeting convened by tribal leaders in 2022 with representatives of state and federal housing agencies, county leaders, local banks, developers, and agents.

The organization hired a retired local banker, Larry Refsland, to start fixing up houses. LLFS obtained a $1 million loan from the Greater Minnesota Housing Fund, which Refsland uses to finance new construction or remodel existing properties. When LLFS sells a property, it replenishes that pot and looks for other opportunities.

“We’ll just recycle that money as long as we can and hopefully it doesn’t dwindle down too fast,” Refsland said.

Read the full story from Star Tribune.

Photo credit: Evan Ramstad, Star Tribune