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Local Self-Help Housing Efforts Boosted

Over 800 low-income families in 22 states will become homeowners within the next three years, relying on their own labor and local community development corporations that will receive loans and grants announced by the Housing Assistance Council.

Most of the more than $10.7 million committed by HAC comes from the Self-Help Homeownership Opportunity Program, which helps local nonprofit organizations to acquire land and prepare building sites for low-income homebuyers. HAC will lend the funds to 41 nonprofit organizations in rural areas throughout the country to develop 846 self-help homes. The program, known as SHOP, is funded by the Department of Housing and Urban Development and administered by HAC and other intermediary organizations.

"Each homebuying family will contribute at least 200 hours of sweat equity to construct their own home," explained HAC executive director Moises Loza. "The SHOP loans from HAC help to get the process started because they cover predevelopment costs such as buying land and installing water and sewer lines. Without this program, it can be very difficult for local organizations to finance these costs."

The local nonprofit organizations that receive SHOP funding will oversee construction and provide training in homeownership and financial management. Typically they organize building groups of eight to ten families who work cooperatively to construct their homes over a period of eight to twelve months. Subcontractors are usually hired to install the electrical, plumbing, and heating lines.

The groups receive SHOP funds as loans but, if they meet their production goals and other requirements, 80 percent of each loan may be forgiven. Nonprofits can then use the money as further subsidy for the same homes - to reduce the total mortgage amounts, for example - or to develop additional self-help homes.

"This year, seven of HAC's SHOP borrowers will be using the self-help method for the first time," Loza noted. "We are pleased to be able to expand this homeownership opportunity to reach more families throughout rural America."

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