Habitat for Humanity Homeowners Getting Hustled
Biz Weak cites some examples:
The guiding principle of the nonprofit Habitat for Humanity, founded in 1976 to build affordable houses for underprivileged families, comes from the Old Testament: “If a brother living near you becomes poor, you must provide for him …do not make a profit on the goods you sell him.” But that ethos doesn’t carry over to the many banks, brokers, and mortgage servicing companies that deal with Habitat families and, increasingly, are profiting handsomely from the financially naive.
….. Many ….. families are being bombarded with offers to refinance out of 0% loans. Jordan Ash, director of the Financial Justice Center at the Association of Community Organizations for Reform Now, an advocacy group, says lenders are targeting Habitat families with phone calls, mailings, and even personal visits. Habitat affiliates in Indianapolis and Columbus, Ohio, say many clients are getting mail solicitations that look to be from Habitat but are not. “I probably get two phone calls a week,” says Dawn Daniels-McNear of the Columbus affiliate.
Some Habitat homes have actually gone into foreclosure.
The seemingly obvious Money Tip of the Day comes from a lender quoted in the article who is trying to do something about the problem:
“You can’t get a better deal than 0%. There’s absolutely no reason to refinance,” says Chris Miller, senior vice-president for loan servicing at NovaStar Financial Inc. in Kansas City, Mo. The firm has launched a pilot program with Habitat to provide mortgage servicing, job counseling, and credit education for free. Miller says many customers come for advice about refinancing, unschooled in the basics and unaware that they currently pay no interest.
The other suggestion of the day goes to the lending sharks: Just because you can take advantage of people, it doesn’t mean you should, and it doesn’t make it right.
This is incredible to me. I am on my local habitat board, and it blows my mind. In my community, however, Habitat holds the mortgage - so the people pay Habitat, not a bank. There could still be a foreclosure, but it would be because payments are not being made against the principal (obviously, I know, since there is no interest).
The most important thing for people to know about Habitat, I believe, is that the organization is not a charity. It is a ministry that partners with families to help them build and create financing for houses. The houses are not free, and the responsibility of financial accountability - however lessened by the lack of interest - is an important facet of the organization.
Comment by Matt — November 15, 2006 @ 11:37 am
#1, thanks for the insight. It must not have the same set-up in other areas, or the kinds of problems described would not be happening.
Comment by TBlumer — November 15, 2006 @ 12:11 pm