Companies rallying for seller-funded down payments

Nonprofits that funnel money from homebuilders into seller-funded down payment assistance programs are ramping up a public relations campaign to save the programs from a proposed HUD rule change or Congressional ban.

Scott Syphax, president and CEO of Nehemiah Corp. of America, plans to hold a press conference in Washington D.C. on Wednesday with hip hop mogul and activist Russell Simmons at his side. Last year, Syphax enlisted the help of another high profile figure, the Rev. Al Sharpton.

Another company that facilitates seller-funded down payment assistance, AmeriDream Inc., has created a new Web site -- SupportHomeOwnership.com -- to drum up public support for the programs. The Web site, which includes a form for submitting a letter to federal and state lawmakers, promises radio ads are "coming soon." A related AmeriDream-backed site, the "Association for Homeowners Across America," links back to SupportHomeownership.com.

Nehemiah Corp. and AmeriDream successfully sued the Department of Housing and Urban Development to block implementation of a rule change that would ban seller-funded down payment assistance on FHA-backed loans. HUD, which claims the loans artificially inflate home prices and triple the chance of default, is pressing forward with its plan prohibit them (see story).

The National Association of Home Builders maintains that problems with seller-funded down payment assistance programs can be addressed without an outright ban on the practice.

"Home builders have a strong interest in, and commitment to, the communities in which they build and, therefore, take a long-term view of their home sales transactions," NAHB said in a July 10 letter to Senate Banking Committee chairman Sen. Chris Dodd, D-Conn., and ranking member Sen. Richard Shelby, R-Ala. "It is certainly not in a builder’s interest to have a recently sold home to return to the market through foreclosure. That is why NAHB is committed to finding ways to continue seller provided down payment assistance in a manner that is in the best interest of home buyers, builders and the FHA."

The letter was posted on SupportHomeOwnership.com, and AmeriDream issued a statement saying the company was “grateful that the NAHB has added its respected voice to the overwhelming public call to regulate -- not eliminate -- down payment assistance funded in part by sellers. Dodd and Shelby backed a sweeping Senate housing bill sent to the House last week that would prohibit FHA from guaranteeing loans that rely on seller-funded down payment assistance.

The House passed legislation in May that would preserve the programs, and House and Senate leaders are now working to resolve differences in the bills, which deal with a range of issues pertaining to FHA and also mortgage financers Fannie Mae and Freddie Mac (see story).

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