Habitat homes sold, former owners could profit

Two Charleston Habitat for Humanity homes were sold Tuesday in a foreclosure auction that could financially benefit both the local Habitat organization and the clients who defaulted on their loans.

Both of the homes on H Street were sold, after some spirited bidding, for more than Habitat was owed, which was about $70,000 for each property.

As a result, the people who lived in those homes stand to collect the sale proceeds that exceeded the debt and other costs; around $10,000 for one property and $20,000 for the other.

Charleston Habitat for Humanity Executive Director Jeremy Browning said both families apparently walked away from the properties last fall after falling behind on payments, and he does not know where they are or how to find them.

The local Habitat organization does not usually rehabilitate unoccupied properties, and had hoped the homes would be purchased by investors.

Habitat for Humanity builds low-cost homes for people of limited means, relying heavily upon volunteer labor. Habitat homeowners in Charleston typically have a no-interest mortgage costing less than $450 a month.

Habitat doesn't make a profit when homeowners pay their loans over time, but the organization will gain close to $70,000 on the foreclosure sales.

That's because Habitat homes carry two mortgages -- one that represents the cost of building the home, and a second mortgage representing the remaining market value of the property at the time the house is completed.

The second mortgage serves to keep people from flipping the homes or borrowing heavily against them, and is forgiven over time, but that mortgage gets paid back if there's a foreclosure.