Habitat for Humanity not Immune to Foreclosure
One of the most renowned and respected non-profit organizations is Habitat for Humanity; it too has not been immune to foreclosures. The agency like other banks advances loans for housing needs but unlike banks there is no profit motive and the long-term loans are interest free. The downturn has caused many homeowners stumble even in their low monthly payments. The r
easons are the same – unemployment or sudden emergency in the family.
To qualify for a Habitat house the income of the household has to be around 30% to 50% of the median in the locality. In Connecticut the area is the county where the family lives.
For Habitat the most important condition is need – there has to be a solid reason as to why the family requires a new house. Sometimes the increase in family members leads to a space crunch or they could be paying too much rent where they currently resided.
Apart from the need factor Habitat has a complex screening method to see that the families they interact with will not be overburdened with debts that are unmanageable to them. The process finds out what other lenders would require. The households credit scores are checked, they have to produce salary slips and prove that their financial position can provide not only for the mortgage but also enable them to pay taxes and other expenses related to housing. The minimum annual income required is $24,000 per annum.
When the initial test is over, representatives of Habitat visit their present residence and those whose have the most need are given priority. For example one family with the burden of caring for a disabled child will be given preference over others.
After this the family has to give the assurance that will put in 150 hours personal “sweat equity” like hammering nails to refurbish or build their own house or that of another family of the Habitat group.
This detailed assessment process ensures that the loan can be sustained by the borrower and in most of the cases this turns out to be true. As far as possible Habitat is compassionate but it does not ignore the basic legal foundations of any agreement. Brett of Habitat in charge of its Hartford branch said “We really go to the nth degree before we get to the point (of foreclosure). But we have a fiduciary responsibility to our donors. If our donors give us money to put people in houses – that are what we need to do”.
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