Habitat for Humanity SKKC’s Debt Remediation Pilot Program Aims to Relieve Key Obstacle for Black Homebuyers: Excessive Debt

To amplify Habitat’s Black Homeownership Initiative, Habitat for Humanity SKKC has launched a Debt Remediation Pilot Program (DRPP). The overall ratio of Black homebuyer applicants is only 6%. Of those, 10% are denied. While the SKKC affiliate has long maintained a higher ratio of Black homeowners at 34%, it realized more needed to be done to help those impacted by historical redlining and institutionalized credit policies.

Excessive debt is often an obstacle to Black homebuyers, particularly first-time homebuyers.  Habitat’s Debt Remediation Pilot Program is aimed at removing that obstacle by paying off those debts and enabling the buyer to secure financing from a traditional lender. Habitat staff are collaborating with other community housing organizations, such as The Urban League, HomeSight, and Africatown to recruit qualifying candidates for the program. 

Applicants referred to Habitat SKKC will be selected using standard criteria, with the final review point being their excessive debt. Once applicants meet the criteria for participation in Habitat home buying, their debt is reviewed and paid. Types of debt that might qualify under this new program include deferred student loans, tax liens or other government judgments, and others assessed on a case-by-case basis, such as medical debt, debts due to identity theft, etc. Their refreshed credit status allows lenders to finance the buyer.

The DRPP agreement adds a level of oversight to the traditional Habitat homebuyer process. Habitat staff simply monitor the homebuyer’s finances monthly to insure there are no changes in income or assets while their home is under construction. The DRPP funding of $250,000 aims to support 5-10 households in Habitat’s 2022-2023 fiscal year.

Homebuyers participating in the DRPP contribute an additional 125 hours of sweat equity and sign their final agreement when their home is completed. The debt payment is built into the buyer’s affordable house payment. When the home is sold back to SKKC, the debt payment portion of the sale will be returned to the Pilot Program’s account to help future Black homebuyers.

Homeownership in the U.S. constitutes the largest component of median household wealth through intergenerational wealth transfer. The wealth gap created by generations of discriminatory housing practices has left Black families without the benefit of decades of real estate appreciation, which could be leveraged to help their children and grandchildren become homeowners, pay for college, or weather financial challenges.

The Debt Remediation Pilot Program is another step toward chipping away at institutionalized obstacles to Black Homeownership, and it represents Habitat SKKC’s deep commitment to supporting Black families in the region. For more information on Habitat for Humanity SKKC’s new Debt Remediation Pilot Program, please visit: https://buyhabitat.org/debt-remediation-fund/