I don't think the government has to evaluate individual mortgages. But when the government is bailing out lending agencies and setting parameter for the quasi-governmental agencies like Fannie and Freddie, the money should carry with it parameters that will help the end borrower and that will stimulate the economy. If the government is going to help subsidize the equity loss -- while technically the government doesn't have to do that, the alternative is that the family loses the home, the bank owns the home -- they sell it at the lower rate and take the loss anyway. So this is saving money in the long run for the lender, the government, and the homeowner. 

  

I think homeownership has been a push even before the Bush administration. Home ownership stabilizes communities. It helps develop equity and assets that help their kids go to college -- 80 percent of kids that go to college have parents that are homeowners. So in and of itself homeownership is a good thing, and that's something that we shouldn't stray away from just because the lending practices went wrong. 

And that's really where I think we hit the wall. For generations, there have been understood and practiced lending principles: you don't spend more than a third of your income on housing, you buy a home that you think you can reasonably pay off. I think that the lending practices of getting more families to afford homeownership is a good principle -- lowering interest rates of people who are low income so that they can afford a home and still meet their obligations is a good practice. That's the genesis of where Fannie and Freddie started off in trying to get more families to buy homes. 

Where it went wrong was when the mortgage products started changing. We had these no-money-down, teaser interest rates with higher interest rates later on. If you go into the heartland of America -- where people couldn't have been talked into anything but a 30-year interest rate, 10 percent down, no more than a third income because of their values -- you don't see the foreclosure rate like you do in the markets that were really hot. People were seeing values go up so quickly that they just thought, well, even if I can't afford it now and even if it adjusts, I'll still have equity and a check at the end of the day. I think people got fooled into thinking the market would always go up and that real estate on the coasts would always be hot property. 

  

We have to get back to core values. Homeownership is still the American dream, and it's still feasible, but we have to stick to core values, i.e., not more than a third of income being spent on housing. What we saw is lenders saying that, "Well, it's a third of your income, but properties are so expensive now, so we can't qualify enough people for loans." So, they stretched it to 40 and 50 percent of income. And families were having a really hard time with their payments. Maybe it pencils out in a month where there are no house repairs, no car mechanic bills, no health bills out of the ordinary -- but when things happened, people couldn't make ends meet. So, we have to get back to saying, 33 percent is really the best way to spend on your housing needs. A 30-year fixed mortgage is your best bet. Interest rates are so low right now; nobody is at risk for going for a 30-year fixed rate. 

  

Definitely. And it's hard because some it was preventable. Some of these families could have been able to keep their homes now that banks are more willing to negotiate and Obama's policies look even more favorable in helping people keep their homes. But if they lost their home a year ago, banks really were not willing to negotiate. We're seeing more inquires. We're seeing the rental market get flooded so rent is going up. Then they're having a hard time finding a rental because their credit is not as good. It's really straining the whole system. 

There's a really stringent process. The first thing we look at is income: how many people live in your house, how much you earn, and if that income is sustainable. Second, we look at the family's willingness to do "sweat equity," which is part of our requirement. Our families do 500 hours of sweat equity of work into their homes and their neighbors' homes. That is, frankly, what I think is one of our best success factors. We have very few foreclosures because our families help build their houses, we've made those houses affordable, we make sure they're not paying more than one-third of their income for their mortgage, insurance, and property taxes. And then, all other things being equal, we want to serve the greatest need. So, if they're living in substandard living conditions -- a car, a garage, a dilapidated building -- we put them at the top of the list. 

The thing about Habitat loans is that they're no interest. It's one of our core principles -- we don't charge interest and we don't make a profit from these loans. When it comes to helping the less fortunate, you shouldn't try and profit from it. That's where the Habitat model is unique. If it's a no-interest loan, they don't have that problem. It's a fixed rate for 30 years, interest free, and we sell the homes at our cost, rather than these market values that go up and down. 

Habitat does a model that I think could even be used by for-profit lenders. That is, if what the family can afford doesn't cover the whole cost of the home, we'll take a portion of the cost of the home and just say, "You don't have to make payments on that portion of the home. That portion will be due upon sale to the next buyer." We don't write it off, it doesn't go away forever, but we just defer it. And that's something I think lenders can do if they're looking at principal reduction programs. 

Reach out. Don't carry the burden of the stress yourself. There's certainly a lot of people that are here to help. The other non-profit agencies, there are several throughout the nation that are willing to sit down with you and talk through your finances and your options. Speak with your lender and get in touch with the right person who has the ability to make a decision about your mortgage and can talk to you about all the federal programs that are out there and what you can tap into. The worst thing you can do is to not call and not reach out. 

I don't think we should turn away from home ownership. That's still the greatest equity building tool that we have for families today. It's the one asset that people can count on, over time, as a long-term investment that will appreciate. We need to stay the course, emphasize home ownership, but also emphasize good lending. 

I think right now people are kind of closing in their walls and parameters and sticking to taking care of their own household and making things are okay with themselves. There's some merit to that, making sure your finances are solid and things like that.  

But if you do find yourself with some time to give, I kind of feel like it's more critical for us to open our doors to our neighbors and get out in the community, reach out and make sure people are doing okay in our neighborhoods, and then take that more broadly and figure out how we can help people that are suffering. It's going to get worse before it gets better. With all the property losses that are happening now, that will show up in our real estate market 12 to 18 months from now. More people will be losing their homes. So it's important to start with your friends, family, and neighbors and ask them how they're doing and what they might need to sustain themselves. But then to more broadly help with organizations like Habitat for Humanity. You'll get a sense of accomplishment by helping out other people and a certainly non-monetary reward that you just can't describe.