March 24, 2011; Source: New Haven Advocate | The Hartford, Conn. affiliate of Habitat for Humanity has two foreclosure proceedings underway against Habitat homeowners. In the past three years, the Hartford and New Haven affiliates of Habitat have filed seven other foreclosure actions. Is this a scandal about Habitat? Hardly.

Habitat's foreclosure rate is 2 percent or less nationally as well as in Connecticut. Notwithstanding their sweat equity, Habitat homeowners carry a mortgage, though equal only to the cost of building the home and offered on a no-interest, generally very low monthly payment schedule. But even with costs that low, families can still fall behind on their mortgages due to unemployment or health issues, the same reasons why homeowners become delinquent on their mortgage payments on conventional mortgages.

When necessary, Habitat will file to foreclose (since Habitat, rather than a bank, holds the mortgage), but the group seems to make every effort to help homeowners keep their homes. Given that Habitat for Humanity became the 8th largest homebuilder (in terms of number of closings) in 2010, just behind Hovnanian Enterprises and just ahead of the Ryland Group, a 2 percent foreclosure rate is a testament to the good work that Habitat does in helping low- and very low-income homeowners buy and keep their homes. But if there are foreclosures in the Habitat network, it is not a crisis in Habitat. The crisis remains the supposedly waning national economic recession that is still raging among the nation's poorest families.

"We really go to the nth degree before we get to that point [of foreclosure]," says Michael Brett, the executive director of the Hartford Area Habitat operation. Habitat stands in contrast to the nation's mortgage bankers, commercial banks, and sometimes the federal government, none of which have yet edged close to the "nth degree" in their efforts to stem foreclosures.—Rick Cohen