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WASHINGTON, D.C. (February 4, 2002) - The AmeriDream Charity, Inc., a non-profit charitable organization dedicated to expanding homeownership opportunities for underserved groups, today announced that it is voluntarily suspending the use of AmeriDream funds for payment of homebuyers' debts until further notice. While AmeriDream's gift funds are primarily intended to provide monies toward a down payment for homebuyers who do not themselves have those resources, some AmeriDream gifts have been used in the past to pay down or pay off debts that the purchaser had accumulated prior to purchasing the property.

The suspension follows a letter (Mortgagee Letter 2002-2) issued by the U.S. Department of Housing and Urban Development (HUD) on January 16, 2002, announcing that HUD would no longer allow funds from a property seller or a non-profit organization to be used to pay off a homebuyer's consumer debts. While funds used towards the down payment or closing costs of a home are still permissible, HUD has expressed concern that repayment of a purchaser's consumer debt with these gift funds may result in a riskier mortgage loan.

"We understand the concerns expressed by HUD and FHA regarding the potential relationship between debt and higher default rates," said AmeriDream CEO Chris Russell. "We strongly believe that debt relief plays an important role in removing yet another barrier to homeownership for low-to-moderate income families, and hope we can work with HUD to resolve the issue."

Russell stated that AmeriDream's temporary suspension of the use of gift funds for debt repayment would remain in effect while the Charity works with HUD.

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The mission of The AmeriDream Charity, Inc., headquartered in Gaithersburg, MD, is to expand homeownership opportunities for underserved groups through the direct provision of down payment assistance and through the restoration and development of communities. A 501(c)(3) organization, The AmeriDream Charity, Inc. meets HUD requirements for FHA insured loans as a charitable organization. In addition to The AmeriDream Downpayment Gift Program, the Charity also operates The AmeriDream Redevelopment Program in the Washington, DC, area, which focuses on rehabilitating properties and returning them to the market at affordable prices. The AmeriDream Charity, Inc. also donated over $600,000 in 2001 to a range of community organizations including Habitat for Humanity and the American Red Cross Disaster Relief Fund.