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GAITHERSBURG, Md.  (December 3, 2004) – AmeriDream, Inc., the nation’s leader in affordable housing opportunities, applauds the recent paper released by Fannie Mae, “The Pluses and Minuses of Adjustable-Rate Mortgages,” which explains that adjustable rate mortgages (ARMs) are often the chosen borrowing method of low wealth first time home buyers, particularly minorities, but that these types of loans are often not the best option for these consumers.

“What AmeriDream is seeing in the marketplace today with its down payment gift program confirms numerous points discussed in this report. Many of the typical borrowers that previously used FHA fixed rate mortgages with down payment assistance from AmeriDream are now using this riskier product,” said Ann Ashburn, president and CEO of AmeriDream. “Although ARMs increase a buyer’s purchasing power, they may be a risky financial decision for lower-income first time homebuyers.” 

Author J. Noel Fahey compares fixed rate mortgages to ARMs, and states that more borrowers are turning towards adjustable rate mortgages (ARMs) to maintain affordability as home prices increase. The low initial rates of ARMs allow buyers to purchase more home for their money, but stretches their finances thin. 

The paper goes onto show the negative effects of a drastic increase in mortgage payments that are associated with ARMs. Additionally, more delinquencies and foreclosures are evident with buyers using ARMs versus those using fixed rate mortgages.

AmeriDream, which has helped more than 150,000 low- to moderate-income individuals and families achieve homeownership, offers an alternative to ARMs, and can help borrowers reach their dream of homeownership without stretching their resources.

The AmeriDream Downpayment Gift Program gifts homebuyers between 3-10% of the sale price of a home. The gift never has to be repaid. As borrowers examine their loan options, it may benefit them to use a down payment gift in combination with a fixed-rate FHA mortgage, instead of opting for riskier ARM products. Using the gift to cover down payment or closing costs, the borrower will be able to maintain consistency and affordability in this high-priced real estate market for years to come.         

In addition to aiding borrowers with money for a down payment or closing costs, AmeriDream offers the DreamKeeper Mortgage Payment Relief Program. DreamKeeper combines a down payment gift and mortgage protection at no cost to the homebuyer. DreamKeeper will protect the buyer in case of involuntary unemployment or disability for up to nine months over the course of the first five years after the purchase of the home.

AmeriDream also provides an online homebuying course for interested homebuyers to learn about the homebuying process and responsibilities of homeownership before they purchase. And, AmeriDream’s home retention program is available to homebuyers who run into financial difficulty after they purchase. AmeriDream is doing things right for America’s homebuyers. For more information on any of AmeriDream’s programs, visit www.ameridream.org or call 1-888-AMERIDREAM.




The mission of AmeriDream, Inc., headquartered in Gaithersburg, MD, is to expand homeownership opportunities for underserved groups and promote the value of homeownership as the foundation for building strong communities and individual prosperity. AmeriDream, Inc. is a non-profit, publicly supported organization that is tax-exempt under Internal Revenue Code Section 501(c)(3). AmeriDream, Inc. meets the requirements for a charitable organization, as referenced in the HUD Handbook 4155.1 REV-4, CHG-1 Section 2-10 for FHA insured loans.  In addition to The AmeriDream Downpayment Gift Program and DreamKeeper mortgage payment relief, AmeriDream also operates The AmeriDream Redevelopment Program in the Washington, DC metropolitan area and Florida, and the Community Link Program nationwide. Through the Redevelopment Program, AmeriDream has spent more than $11 million to rehabilitate properties and return them to the market at affordable prices. Through Community Link, AmeriDream has donated more than $2 million to a range of community organizations, including Habitat for Humanity, the American Red Cross Disaster Relief Fund, the Victims Rights Foundation and the Hatteras Island Rebuilding Fund.