This piece of happy news from Miller-McCune, about Habitat's program to renovate foreclosed houses for client families.
Good points include: They are buying the properties at about 60% discount to the foreclosed mortgage balance, i.e., at close to realistic prices, and forcing the haircut onto the lenders.
They rehabilitate, and sell to pre-qualified (as in, employed, non-drug culture) clients. Clients must invest substantial sweat equity into their homes, as well as show financial stability. No 'gimmees' here. Habitat holds the mortgage, and plows profits back in to the program.
It resembles the old-style Savings and Loan business model. Savers saved for the down payment, lived stable lives, and became known quantities to the S & L officers before a mortgage was written.
That way, everybody prospered! (Heavens, what a concept!!)
The foreclosure rate on Habitat homes is under 2%.
The only bit that gives pause is the use of Federal stimulus money. This good thing is fraught with moral hazard, as it could easily become a slush fund to bail out irresponsible crony lenders, or as a way to hand out political patronage to the politically connected. Were that to happen, it would eventually be exposed, devastate Habitat, and probably destroy it, as the charity relies upon legions of volunteers (mainly from churches) to provide labor and materials. Loss of credibility = demise.
Fingers crossed, and three cheers!
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