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Down Payment Assistance Charity Challenges HUD Rule

“We will fight to continue to help low and moderate income families achieve the American Dream of home ownership”

Gaithersburg, MD -- AmeriDream, Inc., a 501(c)(3) charitable entity dedicated to helping low and moderate income families purchase their own homes, announced today that it has filed suit to block a regulation issued by the Department of Housing and Urban Development (HUD) which seeks to terminate successful down payment assistance (DPA) programs sponsored by AmeriDream and other charities. Those programs provide cash gifts to aspiring homeowners who are able to make monthly payments on the mortgages on modestly priced homes, but cannot come up with the down payments required to qualify for loans guaranteed by the Federal Housing Administration (FHA).

“HUD’s action makes no sense,” said Ann Ashburn, president of AmeriDream. “DPA programs work, and work well, having provided critical assistance to over one million individuals and families in the past few years to buy their own homes, some 80% of whom for the first time, facts which HUD does not dispute. By challenging HUD in court, we will fight to continue to help low and moderate income families achieve the American Dream of home ownership.”

Current law requires homebuyers seeking FHA loans to make at least a 3% down payment on their homes, but permits them to receive some or all of that amount as gifts from charities. Beginning in the mid-1990s, a number of 501(c)(3) organizations initiated down payment assistance programs to enable low and moderate income families to purchase their own homes, with faith-based organizations first taking the lead. From those modest beginnings, DPA programs grew rapidly, helping hundreds of thousands of families. Though HUD is actively seeking statutory authority to offer FHA loans equal to 100% of a home’s purchase price by having buyers assume more debt in lieu of a down payment, HUD has moved to prevent charities from giving low income families the down payment outright.

HUD’s proposed rule was criticized sharply by members of Congress in a June 22, 2007 hearing conducted by the House Financial Services Subcommittee on Housing and Community Opportunity on DPA programs. HUD’s action also reverses its previous position regarding the provision of down payment assistance, and reneges on its written commitment to provide six months notice before changing that position.

“We are all for making sure that our down payment assistance programs work precisely the way they should, and help the people they are supposed to help,” said Ashburn, “and we have pleaded to work with HUD to achieve that goal. But they have repeatedly refused to meet with us and other charities, and ignored our written submissions. Instead, they have sought to shut down charities which are providing crucial help to many minority, first time, low-income or single-parent home buyers. It’s just crazy.”

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A copy of the Complaint is available at: www.ameridream.org/about/hudruleinfo

About AmeriDream

AmeriDream, Inc. is a 501(c)(3), publicly supported non-profit organization founded in 1999.  AmeriDream is one of the first nonprofit organizations to pioneer providing down payment assistance to low-and-moderate income individuals and families to help them become homeowners.  AmeriDream also provides free homebuyer education and loss mitigation programs that help families keep their homes and prevent foreclosure.  These programs have helped thousands of individuals and families become successful homeowners.  To learn more about AmeriDream, please go to www.ameridream.org.