- The Washington Times - Friday, March 14, 2003

No experience? No problem. Skilled or unskilled consumers can take hold of their own future in the hands-on approach to homeownership called "sweat equity."

Though the requirements of individual programs vary, all sweat-equity programs demand that the future homeowner and, if possible, other family members spend a specific amount of time building their home or rehabilitating a property that will become their future residence. All the potential participants need is a willingness to work toward a better future.

Sweat equity offers hope to families who otherwise would be denied the chance for the wealth and security afforded by owning a home, program officials say.

"Our volunteers and future homeowners have various skill levels," says Dan Hall, deputy director of the District's Habitat for Humanity program. "Some have no construction experience at all, while a few are professionals.

"We just have an expectation of people that they be willing to work on their house themselves," he says. "Not only does it reduce construction costs, but it's part of the training process for homeowners to get familiar with the nuts and bolts of their house. We incorporate maintenance training into the housing counseling which the homeowners receive.

"For people who lack the needed skills or strength for some of the jobs, we ask them to bring water to the workers, do site cleanup, or, if they have physical disabilities which prevent them from working on a site, they can do office work for us. We look at each family on a case-by-case basis."

According to Jim Upchurch, director of Interfaith Housing of Western Maryland, "Sometimes we have construction professionals to help build our homes, but in general, our families build their homes themselves. The last group I worked with was mostly female single heads of their households. It requires character to work on these homes day after day, but most important is will and determination.

"The families we work with adapt within themselves and contribute in a variety of ways to the home-building process," Mr. Upchurch says. "Those who cannot climb on the roof will focus on painting projects instead."

While hard work is a necessary element in sweat-equity programs, the benefits are worth a few sore muscles.

"We started this program as a shelter program to help people with their housing problems," Mr. Upchurch says. "What we discovered is that the program has become a wealth-acquisition mechanism for low- to moderate-income people. The ability of low-income people to have stability in their lives through the ownership of an asset such as a home means that they are more likely to have something to tap into during economic downturns. Some of our homeowners in the Frederick area have $10,000 or more equity in their homes because of appreciation."

Program participants must meet certain requirements. Habitat for Humanity homeowners must meet several guidelines.

"First and foremost, potential homeowners must be willing to partner with Habitat in building their home," Mr. Hall says. "There needs to be a demonstrated housing need, with the family living in substandard housing. In addition, the family needs to be living on 100 to 200 percent of the federal poverty guidelines. For example, a family of four would need a minimum annual income of $18,150 and a maximum income of $36,200.

"In addition, we take a look at the credit history," Mr. Hall says. "We try to be as understanding as possible, but people need to be doing something to clean up their credit if they have negative reports or a bankruptcy. We need to know that they can make their payments in order to approve them for a mortgage."

The Habitat program is developing a pre-application requirement that homeowners attend housing counseling sessions that will help them understand the responsibilities of homeownership and help them begin cleaning up their credit, if necessary.

"Our requirement is that each applicant must contribute a total of 300 hours of sweat equity on their property, although some of the hours can be provided by family and friends," Mr. Hall says. "At least 200 of the hours must be by the applicant, with up to 100 hours donated by friends and family members. Habitat for Humanity acts as both a developer and a lender, and we handle both pre- and post-building issues.

"When a home is complete and the applicant has met our requirements, they will own their own home with a 25-year zero-percent-interest mortgage," Mr. Hall says. "The monthly payments are approximately $200 to $300 per month, without including property taxes and homeowner's insurance. The home buyers must also cover a down payment of $500 and closing costs of $1,200 to $1,700."

Interfaith Housing of Western Maryland's sweat-equity program, which operates just in Carroll and Frederick counties, demands more hours of home-buyer participation in building projects but requires no down payment and no closing costs.

"We've built about 125 homes so far, with another 30 or so currently under construction," Mr. Upchurch says. "Our goal is to produce 50 homes a year. Our biggest constraint, even in these rural areas, is to find affordable land. We use grants to hire construction supervisors for our homes, which are typical suburban split-level properties. In some small towns in our region, we've become the biggest builder because we couldn't find any better way to get lots than to take on a whole tract of land."

Interfaith Housing has managed to keep the cost of its homes low because of participants' sweat equity and the group's search for low-cost land. The program has acquired some outright grants of land because the group builds affordable housing.

"We are usually working in rural areas or small towns where we lack the large volunteer base that Habitat for Humanity and other groups can tap into," Mr. Upchurch says. "Our beneficiaries are put into groups of five to six families at a time, and they must agree to work on each other's homes. No one moves into their home until the homes of each family in the group are complete."

The Interfaith families are expected to work 30 hours per week or more and are basically responsible as a group to build their homes even if no volunteers are available to help them.

"Typically, each family will put in 1,500 hours over five to eight months to get these homes built," Mr. Upchurch says. "These people are my heroes. They all have jobs and children to care for, yet they have the determination to work for their homes on top of their other responsibilities. It's a great opportunity for people of modest means to help themselves."

Mortgages for Interfaith Housing participants vary according to income and family size, and can be provided at as low as 1 percent interest. According to Mr. Upchurch, the lowest monthly payment is about $450 per month, with the highest, at nearly market rate, is $1,000 per month. He points out, however, that the homes would cost far more on the open market.

Nonprofit organizations such as Interfaith Housing and Habitat for Humanity receive some funding from donations and from the federal Department of Housing and Urban Development (HUD). In addition, the Department of Agriculture has a Rural Housing Service program that supports development of affordable housing in rural areas and small towns.

"The Housing Assistance Council (HAC), which has been around since the early '70s, helps local groups, both nonprofits and for-profits, find the money for building houses for low- and moderate-income families," says Joe Belden, HAC's deputy executive director.

"The HUD SHOP program, which stands for Self-help Homeownership Opportunity Program, awards money to Habitat for Humanity and other organizations, including our own, which we then funnel to other local groups. The SHOP money can only be used for purchasing land or putting in infrastructure and cannot be used for actually building the home," Mr. Belden says.

SHOP funds can be used only for low-income families who otherwise might not be able to become homeowners, and the potential home buyers must be willing to contribute significant sweat equity to construction of their future residences.

"HAC functions as sort of a bank for some of the smaller groups which then work directly with consumers," Mr. Belden says. "We can direct consumers to these groups if they call us for housing help. Our expectation is that when we loan these organizations the money for building homes, they will complete each project within three years. If they do, they will not be required to repay us 75 percent of the loan. The other 25 percent is repaid to us so we can funnel it into the next project."

Habitat for Humanity, the largest recipient of SHOP funds, has local offices throughout the Washington area that work directly with consumers.

"Fund raising for our projects is a balancing act," says Habitat's Mr. Hall. "We recognize that the government money helps with land acquisition and paying for things like sewer lines, waterlines, streetlights and roads, but the majority of the money we spend is spent on house construction.

"The actual construction money comes from private donations," Mr. Hall says. "We rely heavily on churches to support our activities, and we are doing an outreach to law firms to give us 'buildable hours' to match some of their billable hours. Besides fund raising, our major obstacle in D.C. is land acquisition. We acquired 4.3 acres in Northeast, where we'll build 50 homes, but after that, we will be looking for small infill areas."

"We've done some rehabilitation projects, but it is far easier to do new construction," Mr. Hall says. "Rehabilitation requires a whole new skill level, and sometimes after you start, you find you need to do more work than was anticipated. It's much harder to use unskilled labor in rehab projects."

More info:

•Housing Assistance Council, 202/842-8600; www.ruralhome.org

•Interfaith Housing of Western Maryland, 301/662-4225; www.interfaithhousing.org

•Habitat for Humanity

Anne Arundel County, Md., 410/384-9212; www.arundelhabitat.org

District of Columbia, 202/882-4600; www.dchabitat.org

Frederick County, Md., 301/698-2449; www.frederickhabitat.org

Howard County, Md., 410/715-9041; www.workingnet.com/habitat_howard/index.html

Montgomery County, 301/962-3720; https://habitat.montgomery.md.us

Northern Virginia, 703/521-9890; www.hfhnv.org

Prince George's County, 301/779-1912; www.mith.umd.edu/pghabitat

Southern Maryland, 301/645-4531; www.habitat.org/script/link.asp?url=local%2Ehabitat2Eorg%2Fnomoreshacks

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