AmeriDream applauds report by American Enterprise Institute Fellow Alex Brill

Brill is CEO of Matrix Global Advisors, LLC, and a Research Fellow at AEI

GAITHERSBURG, MD – Ann Ashburn, President of AmeriDream, today praised a new report by Alex Brill, a fellow at the American Enterprise Institute, that casts doubt on the accuracy of data used by the Bush Administration to eliminate downpayment assistance (DPA) funded in part by sellers. The Brill Report is the 2 nd study to question the dependability of the analysis of the U.S. Department of Housing & Urban Development (HUD) as well as the authenticity of their conclusions. A 2006 report by Stephen S. Fuller, PhD., and Lisa A. Fowler, PhD., of George Mason University’s School of Public Policy raised similar questions.

“We have long disputed HUD’s claims,” said Ashburn. “Now two independent studies have determined that HUD’s data is flawed. I only hope that our nation’s lawmakers will make good policy decisions in the absence of good information from HUD.”

Highlights of the Brill Report include:

• Analyses of downpayment assistance performed by the Government Accountability Office (GAO) and by the Department of Housing and Urban Development (HUD OIG) are flawed and exaggerate the effects of DPA funded in part by sellers on mortgage default and claims.

• New data on Federal Housing Administration-insured (FHA) loans allows for a new analysis of the question of impact of DPA on the probability of default. Results indicate that the impact is half that claimed by GAO and one-sixth the claims by FHA.

• According to data from HUD, two-fifths of all African Americans who get FHA-insured loans also receive DPA. More than one-fourth of all Hispanics with FHA-insured loans receive DPA. DPA provides more assistance to African-Americans than FHA in general as over 17 percent of DPA loans are provided to African Americans while less than 12 percent of loans without DPA are provided to African Americans.

• Reforms to restrict recipients of DPA to borrowers with adequate credit scores would ensure DPA loans perform similarly to loans with downpayment assistance from other sources.

• A limitation of this analysis is that it is limited to only the default-related costs associated with DPA and does not estimate the benefits from increased levels of homeownership among the populations served by DPA.

The full Brill Report may be viewed at the following link:

http://www.supporthomeownership.com/uploadedfiles/Alex-Brill-Report-Sept-2008.pdf

The George Mason University report may be viewed here: http://www.ameridream.org/Documents/Reports/Evaluation-of-Research-DPA.pdf