BRYAN, Texas—Born and raised in Houston, Melody Woodard moved an hour and a half away from her hometown to start anew here in Bryan, outside College Station, Texas. But after her husband died, things changed.

An animated, outspoken woman, Woodard was determined to make it on her own. But without help from her husband, things were different.

She works full time as a chicken inspector at Sanderson Farms Inc., a major poultry producer, but affording a mortgage was out of the question. Until after seven years of making ends meet, she heard about Habitat for Humanity and decided to apply.

“Habitat was the perfect thing for my family and myself,” Woodard told The Daily Signal. “At times, I can just cry because I just can’t believe that this has happened to my family.”

She got the keys to her new home on Jan. 26—a Saturday, just four days before her 39th birthday.

Her Habitat home didn’t just put a roof over her head, but also provided a home for the four children, ages 5 to 8, whom Woodard says she saved from “the system.”

“I foster four, and not only am I a foster parent to them, I’m also a relative to them. I just could not let them go into the system,” she said.

“[There’s] more of them,” Woodard added. “I could only take in four.”

A Hand Up, Not a Handout

Habitat for Humanity is a global, Christian nonprofit founded in 1976 that prides itself on giving people a hand up, not a handout. Instead of giving away houses, the organization builds and renovates houses, offering stable, no-interest loans provided by supporters and money earned by fundraising.

Any low-income family lucky enough to qualify for a Habitat home is still required to pay their own mortgage.  

Charley Coats is the director of homebuyer services at the local Habitat branch in Bryan/College Station. He told The Daily Signal that prior to 2014, the branch was building more than 12 houses each year.

But after President Barack Obama signed into law the 2010 Dodd-Frank Act reforms in response to the 2008 financial crisis, things changed. Habitat affiliates all over Texas suffered.

“All across the state, Habitat affiliates, and there are dozens of them all over the state just like us, they have significantly limited the amount of homes they build each year,” Coats said. “In fact, there are a few of them [that] have actually had to shut their doors.”

‘Bit of a Burden’

Coats blames most of the downward trajectory on burdens associated with financial and banking regulations, especially those from Dodd-Frank.

After Dodd-Frank and new government regulations came into play, Coats said, his branch was forced to use a portion of its budget to hire a new employee to keep the organization in compliance with the rules. That person’s salary and benefits ate into Habitat’s overall operating budget, reducing the number of homes the branch could build and sell.

As part of the reforms, Dodd-Frank made significant changes to the Truth in Lending Act, a law that governs residential mortgage loans.

Coats described the amended law as “one of the biggest issues that we’ve run into.”

The change was meant to protect consumers from high-interest loans by imposing strict disclosure requirements on financial institutions that offer credit. But, Coats said, because Habitat provides only zero interest loans, the time-consuming requirement—which includes penalties for noncompliance—is “silly.”

“I understand where they’re coming from, trying to keep lenders honest, but it does get pretty silly when we’re having to disclose these things over a number of months to our low-income homeowners,” he said, adding:

A lot of times they’ll laugh, and I’ll tell them I’m going to tell you the exact same thing I told you before. I’m going to tell you this for the third time, nothing has changed, but unfortunately, we have to do this or we could get in trouble … It has been quite a bit of a burden on our affiliate.

On top of the new regulations imposed under Dodd-Frank, all sorts of federal insurance, guarantees, and subsidies—mainly through Fannie Mae and Freddie Mac and the Federal Housing Administration—made it much easier to get risky, long-term loans with low down payments.

Supporters of these federal policies say they’re good because more people can buy homes, but critics say they’ve resulted in more people having risky debt with no equity.

Crescencio Rodriguez and Edma Sotelo, another low-/moderate-income couple who qualified for a Habitat home in Bryan, learned this firsthand.

‘Octopus Mom’

Sotelo, 33, describes herself as an “octopus mom,” explaining: “Just with my hands everywhere.”

She and her husband Rodriguez, 48, have four children ages 11, nine, six, and four.

They were living in a mobile home when they had two children, and Sotelo was seven months pregnant with their third.

“I told my husband, ‘Let’s get a house. I need a bigger space.’”

He was working good hours and she thought the couple could afford it. The banks, at least, told them they could. But after the purchase, their finances quickly spiraled out of control.

“We would notice that the mortgage each year was higher and higher,” Sotelo said, “but then we would see the balance of the mortgage and we were like, ‘How come it’s not going down, instead it feels like it’s going up?’”

With interest and taxes piling up, she said, her husband “was just working for the mortgage” and not getting to spend any time with their children.

A friend suggested it was a good time to sell, so they put the house on the market. The first person who saw it made an offer, and within the month they were moving.

“I was like, ‘Oh, OK. That’s good.’ It’s good for us, because we didn’t have to pay the upcoming mortgage for the next month,” Sotelo said.

It was a good thing they did sell the house. A few months later, her husband lost his job at Texas Steel Conversion Inc., a manufacturer of drill pipes.

Some critics equate affordable housing with getting more low-income families such as Sotelo and Rodriguez to buy homes.

But Norbert Michel, director of The Heritage Foundation’s Center for Data Analysis, sees it differently.

“Pushing low- to moderate-income families into these low-equity, long-term loans is not really helping them. It’s actually harmful,” Michel said, adding:

It puts upward pressure on home prices and rents, and it puts people at risk by forcing them to live barely within their means. If anything goes wrong—one spouse loses a job—they face foreclosure or selling a house with zero equity. It’s the opposite of what public policy should be doing.

Finding Stability

After selling their home, Sotelo and Rodriguez downsized back to a two-bedroom rental, meaning their four children shared one bedroom.

It was tight, but Sotelo looked at the bright side—her children now got to spend time with their father.

Through the grapevine, she heard about Habitat for Humanity and decided to apply.

On Feb. 15 at 4:30 p.m., as Sotelo recalls, they got the keys to their new Habitat-built house.

“The day that we got the keys … it was the best day ever for everyone,” she said.

The zero interest loan gives their family the stability they need to afford a four-bedroom home in Bryan.

“The monthly payment is stable; it doesn’t go up. Whatever they tell you, that’s your house payment,” Sotelo said.

Coats, who handles client relationships for Habitat, says he wants to bring more stability like this to low-income families throughout Texas. But the federal regulations, he said, are getting in the way.

“At the end of the day, we’re a nonprofit. We’re a Christian-based nonprofit trying to help people,” Coats said. “We’re not out trying to make money. We’re not out trying to rip somebody off, [but] the opposite.”