New hope for Amerdream? Vote NO!

Just got this from Ameridream...

Doesn't Al Green get it? Ameridream doesn't help homeowners. They hurt the economy. They allow people who shouldn't be able to get a mortgage, get a worse one than if they had borrowed from a family member. This hurt all of us, people!

Just to remind you...

1) A buyer is not allowed to accept money from the seller
2) A buyer is allowed to accept money (for a downpayment) from a non-profit.
3) Ameridream is a recognized non-profit.
4) The seller increases the price of the house of the amount of the proposed "gift". The seller then gives Ameridream a "donation" which is of this gift amount. Ameridream takes a cut and then passes on the "gift" money to the unlucky buyer. They now have a house that might be difficult to appraise later and they have a mortgage that they often can't afford.

There's a reason why mortgage companies and the government want home owners to pay a downpayment. This gives them a "piece of the rock" so to speak. They own a part of the house and are less likely to walk away from it if they experience difficulty in paying their mortgage.

Al Green deserves a call or an email from you to not help these types of companies steal from the American economy. Is anybody paying attention to the mortgage crisis. This is one of the reasons it's bad!

Here's the email.
We have been informed that a bill to reinstate reformed downpayment assistance will be introduced as early as tomorrow. The bill is expected to be introduced by Congressman Al Green (TX) with bipartisan support. The bill will have the same language as unanimously passed last year by the House Financial Services Committee.

We will keep you informed as we continue to support efforts to reinstate downpayment assistance.

AmeriDream

"Doing things right for America's homebuyers"

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.

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.