No mortgage meltdown for Habitat for Humanity

Gordon and Thordys Pegler paid off their mortgage a few months ago. It took them 16 years, but they faithfully made every payment.

No over-extending to buy a bigger, fancier house than they could afford. No refinancing to get artificially low payments followed by a balloon payment.

No mortgage meltdown for them. No foreclosure.

As lending institutions nationwide crash and burn over lax lending practices, Pikes Peak Habitat for Humanity is solid as ever thanks to people like the Peglers and the agency's strict lending practices as it works to create affordable housing for the area's low-income residents.

In fact, while Colorado Springs-area developments sit idle awaiting an economic recovery and builders struggle to survive, Habitat for Humanity is pushing ahead with an entire subdivision, Woodmen Vistas, where it will build 36 of 70 planned low-income homes on 10 acres near Woodmen Road and Powers Boulevard.

"We have six houses under construction," said Paul Johnson, executive director of the agency. "We are the developer, builder, mortgage lender and mortgage holder on every one. And we raise all our money in El Paso County."

The Peglers are a good example of how Habitat continues to thrive amid the wreckage of the housing industry: They were carefully selected, low-income buyers who invested sweat in the construction.

The only thing unusual about the Peglers' was the fact they came to Habitat with their own house and property on the west side. Their problem was that it was crumbling around them, and the couple's disabilities made it impossible for them to remodel to make it handicapped accessible.

"We bought our house in 1967 and paid it off," Gordon Pegler, 71, said last week, explaining how he worked as a hospital orderly then as a vending machine serviceman to support his wife and five children before wrecking his back and losing his job.

Then Thordys, now 73, was diagnosed with symptoms of multiple sclerosis in the mid-1980s and they knew they'd need a different house.

"We didn't have money to rehab it to make it wheelchair accessible," Pegler said. "They told us it would cost $120,000. It had too many problems. Old wiring. Old plumbing. Crumbling foundation."

They approached Habitat for Humanity, which selected them and started crunching the numbers.

Habitat required the Peglers to sign over their property. In exchange, Habitat built a new, $60,000 house with two bedrooms, a bath-and-a-half, new appliances, furnace and water heater. And the agency structured the Peglers' interest-free monthly payments at $260 to cover their principle, insurance and taxes so they'd still have money for food, health care and other necessities.

"It meant we could have a decent house at a price we could afford," Pegler said. "We had a rundown place before and we'd probably still be in it, if not for Habitat."

Even better, when April rolled around and he made his last payment, Pegler was rewarded with the return of his deed.

"And it was marked ‘Paid in full,'" Johnson said.

The Peglers were the second Habitat family to pay off their mortgage. A third family has since joined the club. It's a statistic Johnson is proud of, especially in today's financial climate.

"We gave them help up, not a handout," Johnson said. "Now he owns his property free and clear."

Johnson said it was important that Habitat carefully screened the Peglers, as it does with every family chosen for help. To qualify for a Habitat house, a family of four must earn at least $17,000 a year but no more than $34,000, Johnson said. The income criteria slides up and down based on the size of the family.

"We're trying to get people into homes they can afford and people who will stay in their homes forever," Johnson said. "We are trying to create permanent affordable home ownership."

Typically, Habitat works with bankers to ensure its clients' credit is good. Often, would-be buyers are rejected and told to enroll in consumer credit counseling to get their finances fixed before they reapply for a Habitat house.

Then, Habitat will hold the mortgage until a house is paid off or sold, if a client decides to move or life circumstances change through a divorce or relocation forced by a job change or another reason.

That formula has proven successful as Pikes Peak Habitat closes in on construction of its 100th house, hopefully in 2009.

When the six houses now under construction are completed, Habitat will have built 94. It still has an ownership stake in about 85 of those, Johnson said.

Unlike some who made a quick buck by stretching to buy an expensive house and flipping it in the overheated housing market, the Peglers haven't gotten rich with their Habitat house.

"We still live from month to month," Pegler said. "We're not starving. But we don't have money for a new roof. And the house needs paint."

But the program gave the couple a clean, safe place to live that accomodated their needs. And it left them a little money so he could start a business selling his art work on postcards. And Pegler said he is forever grateful for the agency's assistance.

"Every day," Pegler said, "I say thank you to the lord for Habitat for Humanity."


Contact the writer: 636-0193 or bill.vogrin@gazette.com