So how does Ameridream do their thing?

Basically, it's because they (and the Nehemiah company) are legal conduits whereby the seller can give some or all of the down payment for the sellers property to the buyer.

Here's what happens: The buyer wants a house from the seller. They don't have a down payment or they don't have enough (often 3% or better).

The seller increases the price of the house accordingly. That increase is marked as a payment to the Ameridream company and the Ameridream company makes a tax deductible gift to the buyer.

Sometimes the realtors make out a bit better too since the price of the house has been jacked up, the realtor's commission, which is generally a percentage, is higher than the original buyers price. The seller often pays the increase in commission (though savvy sellers should watch for this and request that the commission is based on the pre-jacked price.)

Not too shabby, right?

Oh, forgot to mention. Ameridream often makes the buyer's realtor rewrite the offer to purchase (instead of adding an offer to purchase amendment)

So the seller increases the price of the house to a bit more than what the buyer will receive to help them with the down payment. A little more, you ask? That's the pound of flesh that the Ameridream or Nehemiah Companies receive for their services...non-profit my butt.

There is a stickler and that has to do with the appraisal of the house. When one gets a mortgage, the mortgage company (bank, broker, etc.) usually REQUIRES a 3rd party independent appraisal company. This will help the bank determine if the house is actually worth what the buyer is paying for it. If it's not worth it, the buyer might not get the loan...thus, it's almost always a good idea to put a financing contingency into your offer to purchase just in case. But talk that over with your realtor or real estate lawyer. If you don't have a contingency in there and the bank balks on the loan, the seller may be able to force you to purchase the property even if you can't get a loan...they certainly have grounds to grab your earnest money.

Back to the appraisal and the appraiser. Very often, the appraiser will KNOW THE EXACT AMOUNT OF THE SALE PRICE OF THE HOUSE. That's rediculous but very often the case. Do you think they may have a conflict of interest here? After all, if a bank calls the appraiser and his or her values come in lower than the sale price consistently, the buys won't go through. But if the appraiser knows the cost ahead of time, they can dry-lab the numbers from the get-go. Yeah, I know there are honest appraisers out there...but there's are dishonest ones that are out there too. Live with it and beware.

Ameridream continues to refer to this as a gift and, I suppose, by legal definition it is. But it ain't a gift to the mortgage industry. The buyer now owns a house, sure. But they have nothing invested (equity) in the property so, if bankruptcy comes along, it's really not that big of a deal if they need to walk away. It's not (mostly) their money, it's the mortgage company's. Hmmm...didn't I hear recently of a mortgage company bail out? Think this had anything to do with it?