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Habitat for Humanity applauds proposed amendments to home mortgage rule reforms

WASHINGTON (May 2, 2014) — On behalf of its affiliates across the country, Habitat for Humanity International expressed its appreciation today to the Consumer Financial Protection Bureau for its work to ease unintended burdens of new mortgage rules on nonprofits who make affordable housing possible for low-income families. Two proposed adjustments to the CFPB’s ability-to-repay rule would allow Habitat to continue to meet the needs of underserved segments of the housing market while maintaining protections for consumers at large.

Designed to reach families that do not qualify under standard underwriting guidelines used by banks and other private lenders, Habitat’s successful mortgage model faces significant risk under the current rule’s definitions. The first minor adjustment would provide an alternative definition of “small servicers” to account for certain 501(c)(3) nonprofit organizations that assist other associated nonprofit lenders by consolidating the servicing of loans. The second proposed change would allow those 501(c)(3) nonprofit organizations to continue to extend “soft seconds” – specific interest-free, forgivable loans – without regard to the 200-mortgage loan limit that could hamstring their ability to address the growing need for affordable housing across the country.

“By carefully matching our partner families with mortgages they have the ability to repay and maintaining strong relationships with our borrowers over the lives of their mortgages, the Habitat model equips its partner families to become responsible homeowners,” said Jonathan Reckford, CEO of Habitat for Humanity International. “We thank the CFPB for its support in ensuring that our more than 1,500 U.S. affiliates can continue to serve individual families as well as communities across the country while meeting all necessary federal requirements.”

Habitat’s U.S. affiliates serve as builders, mortgage lenders and servicers for low-income partner families. These families purchase their homes with no-profit loans, which are made affordable through mandatory sweat equity, volunteer labor and cash and in-kind donations.

“We appreciate the continued engagement of CFPB Director Richard Cordray and his staff and their attention to the needs of low-income families throughout the United States,” said Christopher Ptomey, director of federal relations. “Habitat also thanks Representatives Mark Meadows (R-N.C.), Shelley Moore Capito (R-W. Va.), Patrick Murphy (D-Fla.) and G.K. Butterfield (D-N.C.) for sponsoring the Protecting Habitat Homeownership Act of 2013 last fall to address the three narrow areas of the Dodd-Frank Wall Street Reform and Consumer Protection Act that could have otherwise hampered Habitat’s ability to continue to provide affordable homeownership opportunities.”