AmeriDream Addresses National Community Reinvestment Coalition
Gaithersburg, MD – AmeriDream, a national nonprofit leader in affordable housing was featured as a panelist in a discussion of innovative approaches for affordable housing at the annual national conference of the National Community Reinvestment Coalition, held March 14-17, at the Hyatt Regency Capitol Hill Hotel in Washington, DC.
One workshop at the conference examined innovative approaches to challenging foreclosure, combating market fraud, and empowering communities to recognize the newest predatory practices that threaten consumers. The workshop included a special focus on the subject of “suitability” of numerous non-traditional mortgage loans; as well as a discussion of the impact of new federal guidance, appraisal fraud, and predatory practices that is impacting communities across America.
AmeriDream President Ann Ashburn presented information about nonprofit organizations that provide down payment assistance and how these organizations are designed to work with FHA and the population that both serve which are low-to-moderate-income individuals and many first-time homebuyers.
“Often, people don’t quite understand how these nonprofit organizations work and there is a lot of misperception,” Ms. Ashburn commented. “Workshops like this one, give us an opportunity to correct these myths, tell the complete story, and highlight the work we are doing to help underserved groups become successful homeowners through safe loan programs such as FHA.”
Nonprofit down payment assistance organizations, like AmeriDream, help families get into homes who would otherwise never achieve their dream of homeownership.
They accomplish their mission by helping low-to-moderate-income individuals and families overcome the down payment barrier to homeownership while also giving them positive equity in their home from day one.
Nonprofit organizations that provide down payment assistance were first introduced to the public in 1997 after receiving conformation from the Department of Housing and Urban Development (HUD) and the IRS as an allowable gift source and as a nonprofit (respectively) under HUD guidelines and IRS qualifications as a 501(c)(3). Since then, they have helped more than one million individuals and families become homeowners.
Nonprofit programs were designed to work with the same population served by the Federal Housing Administration (FHA). The FHA was created in 1934 to give home buyers, who most likely have a low-to-moderate-income and a less-than-perfect credit record, access to reasonably priced mortgages under fair terms and universal pricing.
In an effort to clarify some of the misconceptions about nonprofit organizations that provide down payment assistance, Ms. Ashburn called attention to several points regarding down payment assistance and FHA, including:
- Down payment assistance programs are not mortgage products. They are a supplemental program that works primary with FHA in accordance with HUD rules and guidelines.
- Nonprofit organizations do not over value homes to include service fees. A fair market value appraisal is a critical part of the home buying process. Nonprofits that provide down payment assistance do not conduct appraisals and are not involved in communications with appraisers. All homes using FHA with down payment assistance are required to have a HUD certified appraiser conduct the appraisal.
- Down payment assistance program are not predatory lenders. Since the 1930’s FHA insured loans have helped low-to-moderate-income homebuyers, with the secure, low interest rates critical for families working just to make ends meet. Nonprofit organizations that provide down payment assistance serve the same population as FHA. Nearly half of FHA loans use down payment assistance provided by nonprofit organizations.
- High claim rates are caused by nonprofit down payment programs. Claim rates are caused by a catastrophic event in a homeowner’s life. Loss of job, serious illness and divorce are the most common catastrophic events that cause claim rates. The financial health of the homeowner and the economic health of the area or region where they live are two major predictors for successful homeownership. Nonprofit down payment assistance organizations serve low-to-moderate-income individuals; often they are first-time homebuyers and most at risk. Recognizing that it is this population that down payment assistance programs serve, these programs still have a 94% successful homeownership rate compared to family down payment assistance rate of 95%.
- Nonprofit down payment assistance programs have limited positive impact. These programs have helped over 1 million individuals and families become homeowners who have gained an average of $18,000 in equity. Additionally, there has been a $22 billion net positive economic impact to the national economy because of nonprofit down payment assistance.
Ms. Ashburn also emphasized that while nonprofit organizations that provide down payment assistance have been widely viewed as helping to increase the nation’s homeownership rates, there are areas within the nonprofit sector that could be improved.
AmeriDream’s recommendations include:
- Increase enforcement of current regulations. Many abuses that occur in areas of the mortgage industry and nonprofit sector are already addressed by existing regulations and policies but they are not enforced effectively.
- Change the appraisal process. Implement a blind appraisal process that would increase independence and ensure that homes are fixed at their true market value, stopping inflation and addressing the concern of potentially contributing to loan claim rates.
- Require homebuyer education for anyone that receives down payment assistance. The home purchase process can be costly and complex. Early participation in a homebuyer education program can help consumers make sound decisions as they make plans for a successful home buying experience.
- Code of Conduct and Best Practices. Additional recommendations can be found in AmeriDream’s Code of Conduct and Best Practices.
“At AmeriDream, our goal not only is to assist underserved individuals and families achieve the dream of homeownership but also to help them become long-term, successful homeowners,” Ashburn concluded.
In addition to Ms. Ashburn, other panelists included: Janice Bowdler, National Council of La Raza; Gail Burks, the Nevada Fair Housing Center; Alan Fishbein, Consumer Federation of America; and Robert Stupp, Baltimore Community Law.
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AmeriDream, Inc. is a 501(c)(3), publicly supported non-profit organization founded in 1999. AmeriDream is one of the first nonprofit organizations to pioneer providing down payment assistance to low-to-moderate income individuals and families to help them become homeowners. AmeriDream also provides free homebuyer education and loss mitigation programs that help families keep their homes and prevent foreclosure. These programs have helped thousands of individuals and families become successful homeowners. To learn more about AmeriDream, please go to www.ameridream.org.
About National Community Reinvestment Coalition
NCRC is a national nonprofit membership organization that promotes economic justice and equal access to credit capital and financial services to traditionally underserved communities.