Habitat offers sweet equity

Local chapters help hundreds with American Dream house

Most Habitat for Humanity homeowners have lived paycheck to paycheck, with a household income of $35,000 or less. Before receiving help from the organization, many had never opened a savings account, created a budget or stood a realistic chance of owning a home.

Yet local Habitat affiliates report a surprising level of success. Only three of the 168 homes built by the TriState chapter since 1987 have fallen to foreclosure. Forty of the 50 homes built by the Millcreek Valley chapter still have the original occupants. And at least 16 of the Cincinnati chapter's 134 partner families have paid off their mortgages.

As local housing organizations and government agencies join to combat predatory lending and a record number of foreclosures, there could be something to learn from the nonprofit, which thinks that it takes a village - and a lot of tough love - to raise a family out of poverty.


"One of the common myths is that these homes are free. Families do their sweat equity and take out a mortgage," says Gerry Ellspermann, executive director of TriState Habitat for Humanity, which builds in Butler, Warren, Clermont, Dearborn, Ohio, Boone, Campbell and Kenton counties.

In September, Edgar and Jamie Rowland were married in the backyard of their powder-blue Latonia Lakes home, three months after moving in. Their three boys - ages 7, 5 and 2 - have to wash their hands after dinner and take their shoes off when they come in from playing outside.

But this vision of domestic bliss once was just a mirage for the Rowlands. Before the family was selected by Habitat for Humanity in 2006, they were paying $850 a month for a two-bedroom apartment. They had no collateral or down payment to offer mortgage lenders, who saw Edgar's construction job as risky.

"We were moving at least once a year, to keep our heads above water (when) the rent would go up," Jamie says.

Like other lenders, Habitat assesses a family's financial and employment history, income and debt, but it also considers other marks of responsibility, such as satisfied letters from a landlord or Duke Energy.

More than 700 applications were received last year by the Cincinnati affiliate. All but 120 were ruled out in the first round, executive director Tom Salzbrun says.

Because families must complete 500 hours of "sweat equity" before closing on a home, most begin performing community service and working for Habitat even before they know whether they are selected.

"I showed them I was interested by working on other (Habitat) homes and at their fundraisers," says Phyllis Baber, who moved into her Habitat home in Lincoln Heights in 1991.

Part of the 500 hours is spent in class.

As with Federal Housing Administration-backed loans, Habitat requires families to attend at least 10 hours of accredited financing and homeownership classes.

"Ultimately, their success or failure is not based on income, it's based on their habits and training," says Gabe Blumer, director of development for Millcreek Valley Habitat for Humanity, which builds in Hamilton County north of Galbraith Road.

Patricia Rohrer, with the Home Ownership Center of Greater Cincinnati, sees education as a must for every first-time buyer.

"Even if you're a doctor or lawyer, that doesn't mean you know about buying a home," Rohrer says.

Each Habitat family is assigned a "nurturer" or "advocate" who serves as a consultant and friend. They help select carpet and countertops and offer practical advice, such as how to create a filing system or yearly budget.

This support doesn't end at the closing table.

"You really need to keep in touch that first year, because that's when a family needs you," says Bobbie Bahler, who has served as an advocate for four families since 2001.

Cincinnati advocates visit a family at least four times the first year to familiarize them with seasonal and regular maintenance - checking smoke detectors, creating a personal property inventory or testing the sump pump.

Salzbrun credits this relationship for the organization's low number of foreclosures.

"If I get a mortgage through a bank, I don't have a family coming along with me," he says.

Like many builders, Millcreek and Cincinnati Habitats cover home repairs for the first year.

The TriState Habitat chapter deposits about $15 from each monthly payment into an escrow account for repairs.

Families also can attend Cincinnati Habitat's ongoing, bimonthly meetings, which discuss painting techniques, wills, insurance, filing tax returns and keeping up with energy bills.

"It also creates a social support network," Salzbrun says.

Because most foreclosures can be avoided if a homeowner speaks up as soon as a financial problem arises, "there's one person our partner families know pretty well. They have her home phone number," Ellspermann says of the TriState affiliate's mortgage administrator.

For long-term crises, such as physical disability, the organization often will stretch the mortgage from 20 to 22 years to lower the monthly payment. But if a family can't make payments because of poor choices with discretionary income, "that requires educational assistance and some tough love," Salzbrun says.

In the past 20 years, 14 local Habitat homes - 3.9 percent - have fallen to foreclosure. Others in default deeded the home back to the organization and avoided a negative mark on their credit.

This late-in-the-game assistance is another trend that's gaining popularity in the general real estate market.

"We have some lenders who can help them, or we can help them negotiate with their current lender," Rohrer says.

Property taxes and utilities can negate the savings from Habitat's zero-interest loans. But most families, including the Rowlands, who have a monthly mortgage payment of about $450, break even and gain the chance to build equity, stability and a future.

Baber paid off her home in 2004 and now owns a rental property in Lincoln Heights as well.

The Rowlands, who are still settling into homeownership, are paying back in another way: volunteering on a Habitat home under construction next door.

"Everything just fell into place for us. All we need is the white picket fence," Rowland says.

BY AMY HOWELL