AmeriDream - Not great for the mortgage industry

Ameridream Mortgage Assistance program. This is a legal downpayment assistance program, that, in my opinion, should be outlawed and dismembered. It uses a loophole in the current law to create a system whereby a person can get a virtually 100% home loan with no money down.

There are reasons that the goverment (and many mortgage companies) require a homeowner to put a downpayment down in order to qualify for a home mortgage. Here are some of those reasons:

1. When your loan includes a downpayment the loan rate (interest rate) almost always is lower than if you didn't have one.
2. You are immediately telling the mortage company and the government that you have some of your own sweat and tears into the home. You're not just borrowing the entire amount so you have no equity
3. It shows you have the self control and financial wherewithall to save some $$ for something very important
   

Please understand. I consider the purchase of a house really a major part of the American Dream. I also think people should work a little toward that dream before they qualify to get it. 100% loans and seller assisted (or loophole) DPA allows people who aren't ready to qualify for a mortgage to purchase a house and very often get into a situation which is more difficult than they realize.


When President Bush recently signed into law the mortgage assistance bill, (due to take effect on October 1st), many thought that the Ameridream program might finally bite the dust...

But there's a movement out there and it's got some momentum.

It's called bill # HR 6694 and it does have some support from the government powers that be.

Here's the bill:
http://thomas.loc.gov/cgi-bin/query/z?c110:H.R.6694:

On my next entry, I'll describe the Ameridream program and why I believe it's bad for everybody.