Twin Cities Habitat for Humanity has chosen to provide home preservation services for struggling homeowners without increasing their housing costs. Instead, our family partners contribute to the program through sweat equity, a homeowner covenant which states their commitment to their neighborhood and a willingness to let us share their story. It is only when our cost exceeds $3,000 do we encumber the property with a 7 year deferred loan (mortgage and note). Otherwise, our operating costs are recovered through sponsorships as well as private and public grants.
While zero-interest lending is a wonderful aspect of Habitat’s home building model, a loan with monthly payments of up to 10% of the family's income would place an enormous burden on ABWK partner families. These struggling families, particularly low-income seniors (of whom many are vulnerable adults) and others with fixed incomes, have worked many years to acquire, build equity, and maintain their properties. Also, many of our homeowner families make below 30% of the area median income. The average income of a family coming to Twin Cities Habitat for help is $22,000. So many of our families must make difficult choices each month between paying for food, medicine, utilities and other non-negotiable costs. Payable monthly loans would force many families to allocate a larger portion of their monthly housing budget to an expense they simply cannot afford.
In addition to the cost to the families, servicing a significant quantity of payable loans would be a burden on our affiliate. Our ABWK program serves 120 families per year. The cost of recording, servicing and monitoring so many small loans would erode much of the value of the loans. It is likely that a significant number of these loans would default, and as a practical matter, we would never foreclose on a delinquent loan and therefore making consistent collections from many families unlikely.
Given the struggles that so many homeowners face in keeping their homes and given that ABWK brings so much good will to these families and our communities at a reasonable cost, we would never jeopardize our relationships to get into a collection program that adds to the stress of struggling families. We have been called to extend a hand of grace to our neighbors in need, to restore their homes and help stabilize their lives so that they can continue to live and enjoy the home they have worked so hard for. abwk habitat for humanity