Should Ameridream/Nehemia be saved?

The bill hasn't been passed yet but Ameridream is certainly lobbying for it to be passed.

As you may have heard, Ameridreams business model is based on a legal loophole. That is, DPA (down payment assistance) from a non-profit that has a sellers contribution is (currently) legal. It's due to die as of October 1st.

It really doesn't make sense, if you think about it. After all, whats the purpose of a down payment. It gives the homeowner some equity in the property and therefore makes them more apt to feel a sense of ownership. When a person buys a property and owns nothing right off the bat, what happens? Well, since they don't have anything to lose (other than their credit rating, I grant you), they may very well be more likely to walk away; after all they're not really losing any of their money.

The other thing that people forget is that the price of the property needed to be artificially inflated to offset the sellers kickback to the Amerdream program. Then an appraiser who was willing to inflate the price needed to be in on the action. I speak from experience in this matter: these appraisers usually know the sales price of the property before they step foot into it. So if they want to keep appraising properties, its in their best interest to find comps that bump the property's value up. All well and good, but come time to re-sell this property, it often doesn't add up and the sale cant go through or foreclosure can occur.

I don't deny that there are anecdotal instances where this is a good thing to do. I just believe that in the majority of the cases, a down payment is a necessary rite of passage that a homeowner should take before embarking on the sale journey.