A Solid Alternative to a Free House

On my post titled Two More Extreme Makeover Home Edition Homes in Trouble I detailed several instances from the popular ABC TV show where people who had received massive, sometimes free, homes got into one financial difficulty or another. In the comments, many people thought the issues leading to these difficulties included:

• The size of the homes -- they are massive and expensive to own and maintain
• How the homes are given -- They require no work and usually little commitment from the eventual owners
• Lack of knowledge -- Many of the recipients had gotten into financial trouble and appeared to know little about managing money (so no wonder they got into trouble again when given a new start)

One commenter contrasted these downfalls with another "program" that builds homes for people:

A group that actually does well giving away more-or-less free houses is Habitat. I worked a little with our local Habitat, and the application process is BRUTAL. It is like a job interview, a mortgage application, and a security clearance in one. The people who get Habitat houses are exactly the people who will be grateful and work to maintain them. The ABC recipients, maybe not so much.

I was intrigued, so I went to the Habitat for Humanity website. Here's some information on the charity from their fact sheet as well as my thoughts interspersed:

Through volunteer labor and donations of money and materials, Habitat builds and rehabilitates simple, decent houses with the help of the homeowner (partner) families. Habitat houses are sold to partner families at no profit and financed with affordable loans. The homeowners’ monthly mortgage payments are used to build still more Habitat houses.

Note the differences versus Extreme Makeover:

• Rehabilitates homes -- doesn't tear down old structures to build a mansion
• Simple, decent houses -- not over-the-top homes
• With the help of the homeowner (partner) families -- the final owners have a lot of sweat equity invested in the place by the time it's done
• Habitat houses are sold to partner families at no profit and financed with affordable loans -- there's a purchase and a mortgage involved -- responsibility but not one that's overwhelming
• The homeowners’ monthly mortgage payments are used to build still more Habitat houses -- nice way of using funds from those helped to help even more people

Habitat is not a giveaway program. In addition to a down payment and the monthly mortgage payments, homeowners invest hundreds of hours of their own labor — sweat equity — into building their Habitat house and the houses of others.

Again, a big difference versus the ABC option. The final owners not only have lots of hard work invested in the home by the time it's done, but helping build it also fosters pride in the home and a responsibility for it. I'm guessing Habitat owners treat their homes with more respect as a result (BTW, though I'm sure there are plenty of examples of Habitat homes being trashed, foreclosed on, etc., I bet these are way lower as a percentage than the ABC homes.)

Families in need of decent shelter apply to local Habitat affiliates (local chapters). The affiliate’s family selection committee chooses homeowners based on their level of need, their willingness to become partners in the program and their ability to repay the loan. Every affiliate follows a nondiscriminatory policy of family selection. Neither race nor religion is a factor in choosing the families who receive Habitat houses.

Speaks in part to the process the commenter talked about.

A bit about the charity:

Donations, whether to a local Habitat affiliate or to HFHI, are used as designated by the donor. Gifts received by HFHI that are designated to a specific affiliate or building project are forwarded to that affiliate or project. Undesignated gifts are used where most needed and for administrative expenses. HFHI’s most recent audited financial statement is available online.

Seems like they do a good job of this too -- they get four stars (this highest rating given) from Charity Navigator.

I've talked about Habitat before, suggesting it's a great, cheap way to learn building skills. Furthermore, it seems like a very effective charity (Jimmy Carter aside) and one I should probably consider being a part of. But at the least, it seems to be a viable alternative compared to the "get a free mansion" that Extreme Makeover Home Edition offers.

What are your thoughts on this issue?

Comments

[mapgirl]

Actually, HFH does build homes from the ground up. But they are usually modest. The Hurricane Andrew project in Homestead, FL is one place where they started over fresh because there was no home left to rehab. It was an entire neighborhood they rebuilt. Pretty amazing.

I have also worked on houses in various parts of the US where it was a repair or rehab, depending on the situation.

It is a faith-based, ecumenical organization, so it's not for everyone. But it's usually not very pushy if you aren't a believer. (I've been with church groups and school groups that were religious and non.)

I believe greatly in what they do because they know that homeownership for their resident families is a stepping stone out of permanent cycles of poverty. They really stick with a family to ensure success. The application process is tough and the sweat equity expectation is no joke. Once you've been selected, you work on other people's homes before your own and that perpetuates a cycle of giving.

I highly recommend them, plus you can go to their international sites or on spring break with them as a volunteer. (The Hurricane Andrew one was college spring break for me.)

[Beth]

It seems kind of odd that you would devote an entire post to praising an organization that was conceived, developed, and promoted by Jimmy Carter only to insert a comment at the end indicating that these accomplishments are in spite of Jimmy Carter rather than because of him. If you're going to praise HFH, you're praising Jimmy Carter. You may not agree with him politically, but that dig was completely unfair if you think HFH is a worthwhile charity.

[Kevin]

I volunteered with Habitat in high school through a service organization I was involved with and it was a great experience. I plan on doing it again when they do another project in my area.

Habitat also has their ReStore locations around the country that sell donated and used materials with proceeds going to build more homes. Sometimes it's a good alternative to Home Depot or Lowe's if you're working on your own home and need materials.

[Chris]

I've only seen one EMHE family reject the free vacation and go back to one of the places that helped them and helped out there. That was something I thought was really appreciative of them.

[FMF]

Beth --

You're mistaken about Jimmy Carter's involvement. While he has promoted and served in helping HFH, he most certainly did not conceive of and develop it.

Source: http://en.wikipedia.org/wiki/Habitat_for_humanity

[Noah]

@Beth: Agreed.

[Traciatim]

I never really liked HFH ever since a person that I worked with received a nice brand new home in our cities core downtown area, walking distance to work.

At the time I didn't make much more than them, and was not able to receive similar help because of my salary. So I get to live in a 30 year old bungalow that's across town because I make more money even though we both work at the same place. Granted I still live in a fine place and I did it myself rather than getting freebies, but I would much rather have a brand new home right downtown in a heartbeat. Maybe I should quit and get a lower paying job so my total income can increase thanks to the handouts.

[guinness416]

I'm a construction professional, so get involved with some of my local chapter's estimating and purchasing etc. I also volunteered with them in NYC. Every contact I've had with them has been wonderful - great people, great organization. Also, don't know if they have them in you area but here HFH have stores which sell great old hardware, mouldings, doors, etc that they find along the way. Those stores are treasure troves and are well worth checking out! But I guess HFH doesn't make for good TV.

Traciatim, a bit whiny, no?

Traciatim-
As the article said, the homes are not free. Your coworker probably still had a mortgage. Most HFH houses are downtown because that is where property values are lower, so even though it's convenient for you and her, there are probably many perks to your area. And finally, you don't know what other circumstances she has going on. You say you weren't able to get similar help, but did you apply for it?

[Beth]

My apologies for incorrect information - I should have doubled checked what I was writing. I guess the fact that his name is so closely associated with the organization caused me to make the assumption (I know, I know, bad idea) that he was more heavily involved in its genesis.

My original point remains the same, however - the dig was unecessary. Even if he's only a spokesman, fundraiser, and advocate, it's still a positive thing that he does and is worthy of praise rather than derision. I hope other former Presidents, whatever their party, follow his example and take part in organizations like this at least some of the time.

[Jim]

I agree the dig against Jimmy Carter was completely unwarranted. Throwing biased political statements into an article like this serves no purpose whatsoever and it detracts from the actual message. Carters involvement with HFH has been significant and should be praised and not fuel for biased commentary.

Jim

[Paula]

Traciatim,

I actually appreciate your position in general. My family and I have worked hard for our home and are concerned with the current mortgage crisis and some of the proposed remedies that we feel are unfair.

However, I really feel Habitat is different. I worked with them when I was a single mom. The group I worked with, you had to input hours and services before they would even look at your application. You are not handed a house, you still have to pay the mortgage, and pay with volunteering time. A lot of time. So while I am sure you worked hard for your house, your coworker had to work hard for theirs too, just in a different way. Plus every Habitat house I have seen has been humble, and you don't get a lot of choices in what you get.

[wanzman]

An even better idea would be to purchase a house you cannot possibly afford, doing so with a wacky mortgage. Then, when you cannot make the payments, let me (taxpayer) pay for it for you! I'll even keep paying for my smaller house that I can comfortably afford, and keep paying for your 5,000 sq ft McMansion with a smimming pool, too.

Sound like a deal?

[rwh]

I've always been very impressed with Habitat for Humanity. I've also always been very impressed with Jimmy Carter.

[dogatemyfinances]

Thanks for picking up my comment! Having actually talked to many HFH recipients, I know they are deeply touched by the gift and generally good people

HFH houses are very modest and simple, not exactly envy-worthy, just read their building guidelines. ABC, not so much.

[dogatemyfinances]

Thanks for picking up my comment! Having actually talked to many HFH recipients, I know they are deeply touched by the gift and generally good people

HFH houses are very modest and simple, not exactly envy-worthy, just read their building guidelines. ABC, not so much.

[Lord]

They try very hard for a successful outcome, but even they admit some cases don't work out. Some have children they can't afford, increase other spending like utilities, or get over their heads in debt and need further assistance.

[Ron]

As long as there are humans involved there are no perfect solutions. I like this type of solution and the approach HFH takes to fulfill the need for affordable housing. I'm all for people being part of their own solution and feel good about supporting these kinds of programs as opposed to the other solution of endlessly giving away money without any accountability. Like most people, I don't see anything wrong with helping those who need help, even if it helps a few that don't.

[Jim Odell]

Would the people who get a free home would have to pay income tax on the value of the home.

[Bonnie]

I have never understood why EMHE does such extravagant houses. They could help out 5 families for what they give one. The concept of giving to people in need, and these families are in need, is still a great effort but as always too much of a good thing isn't always good for anybody. The money and donations used should be better to spent to helping more than one family. And yes every family should recieve credit councelling.

[Jason]

I think the problem is that ABC is producing a TV show. MAYBE their intentions are to help the family, but I think a modest and safe house would be more than enough for most of these situation. But, because it's a TV show, they need to make it grand and "extreme". If they built a 1000 square foot, 3 br house, with no frills, it wouldn't make for a very impressive "reveal".

[moneyguru]

Sadly, it is about ratings and impact. Those families are certainly worthy ~ but are we giving them a 'hand-out' or a 'hand-up'. As a viewer, I guess we never really think about the 'after' when life hits them upside the head with all the bills it takes to maintain such huge homes. Kinda like those individuals who hit the lottery big-time - stats show that they are often broke (spent-out) eventually as they didn't have money-management skills BEFORE they acquired all that money. The green-eyed monster doesn't visit me anymore when I think of these families who are now struggling to maintain homes which are to 'big' for them (in every respect, especially financially).

[Zombie Money]

As another person above me mentioned, its all about tv ratings. Good read though.

[Jules]

I just attended the filming of a Extreme Makeover in my city here in Texas today, you know the whole move the bus, yadda yadda yadda. As I stood there in the cold and talked to people, it made me really think about the long term effect of giving a struggling family a masion they cannot afford to insure, maintain, or pay the property taxes on. Property taxes her in north Texas are one of the highest, even though our houses seem more affordable. The family who got this house had a small house ruined by a flood on a nice piece of land, now there is a very large house on that land, my guess is they will go from paying $3,000 a year property taxes, to at least $9,000. That is almost $1,000 a month in taxes. And their mortgage on the old house was not paid off by the show, or donations, so they have that too.They may end up in a worse situation then before. And will they get taxed for all the goods in the house? If I went to the store and bought a TV or appliance I would pay sales tax, but I hear the show has a loop hole to avoid the homeowners having to pay sales tax, and the show does not pay them either.

This was our kitty Cashmere right before we left. I had one last batch of laundry to do before we headed to Chicago. We had already took Baylee to the“ sitter” and I think Cashmere was livin’ it up while she had a dog- free house (a. k. a. not having to fear for her life 24/ 7 and being chased under the bed constantly).