- The Washington Times - Friday, May 12, 2000

The Nehemiah Progressive Housing Development Corp. in Sacramento, Calif., has provided $155 million in gift funds as of May 3, according to its Web site (www.nehemiahprogram.org). These funds have helped 44,378 families in 48 states and the District buy homes since Nehemiah's founding in 1994.
Tiffany Lunsford bought her first home using the Nehemiah program last August. A career woman who is single and just turned 30, Ms. Lunsford received help with the down payment and closing costs.
"I wouldn't have been able to save enough money for a normal mortgage," she says. "For about the last three to four years, I wanted to buy a home."
Ms. Lunsford was in her home 30 days after the contract was signed. "It was a very positive experience," she says.
Nehemiah is a charitable organization set up in 1994 by Don F. Harris, president and executive director, to find "nongovernment sources of revenue" to create affordable housing. The program came to the East Coast several years ago.
Mr. Harris, an assistant pastor at the Antioch Baptist Church in Sacramento, set out to find a way to overcome what can be the biggest obstacle to homeownership the down payment. The Nehemiah program provides a gift of 3 percent to the home buyer to cover the down payment on a mortgage through the Federal Housing Administration (FHA), which works with buyers with low incomes and less-than-perfect credit who cannot secure a conventional loan.
To participate in the Nehemiah program, the home buyer must have approval for an FHA mortgage. Interested buyers can visit the Nehemiah Web site and find information on FHA-approved lenders in their area.
The catch is that the seller must donate 4 percent of the selling price to Nehemiah. Nehemiah retains 1 percent and gives the remaining 3 percent to the buyer for the down payment. In a buyer's market, it is easy to understand why a seller would be willing to do this. But is the program still viable in the seller's market of today?
"Last month, we closed 13 to 14 cases with Nehemiah," says Claudia Hauyon, a loan officer with First Horizon Home Loan Corp.'s Atlantic Coast division in Fairfax.
"We get the 4 percent and get the seller to do the roof certification and the warranty and ask $1,000 for closing costs," she says. "We do at least seven to 10 Nehemiah mortgages every month. In most of my cases, [buyers] spend about $1,500 of their own money. They have to have 1 percent of the purchase price in their own funds which can be a gift."
Ms. Hauyon says the majority of her clients are minorities.
Maurice Archambault, a Realtor with Infinity Realty in Fairfax City, says 98 percent of his buyers are from the Latino community.
"I deal 100 percent on a referral basis," he says. "It's a great market since most of them are renters at the present." Mr. Archambault says most of his buyers are 30 or younger and are families with several children.
"I feel very good about doing this to help these young families get started in homeownership with the least amount of money," he says.
"Nehemiah is an excellent program, but in today's market, it's a little more difficult to use. Many sellers are not willing to contribute closing costs," Mr. Archambault says.
Mr. Archambault says he closed 10 properties last month, and nine of them were bought using the Nehemiah program. "You have to show a lot more properties, and you have to work very, very hard," he says. "Out of these 10 cases, I might have written two to three contracts before getting one accepted."
The price range of Mr. Archambault's buyers is $150,000 and less. To find homes in that price range, he says, he focuses on Woodbridge, Dale City and Manassas.
"It gives a whole group of people the opportunity to be homeowners," Mr. Archambault says.
"It depends on the geographic area and the type of property you are purchasing," says Michael Femiano, a loan officer with Prosperity Mortgage in Rockville. "Most of it is low-end, hard-to-move properties. Wherever the market is soft, we can do it."
Mr. Femiano says he just financed a condo where the seller paid an additional 5 percent to 6 percent in closing costs, plus the 4 percent for the Nehemiah program.
"It's a good program and helps people get into a home. Everybody that I have done the program with would not have been able to buy otherwise," Mr. Femiano says.
"Until FHA completely bans the program, we will use it," he says. "FHA doesn't like the program."
He explains that the Department of Housing and Urban Development (HUD) is looking at the performance of homeowners in making their payments. He says HUD believes there is no incentive for owners to stay in the house because they have not invested a significant amount of money in the home and HUD fears being left with the property.
"HUD's concern has been with where the down payment comes from," says Lee Jones, a spokesman for HUD. Mr. Jones explains that HUD wants the consumers to be free to choose whatever home they want.
"Our concern in the past about some down-payment programs has been the down payment funds created by developers to steer buyers into their homes for sale," Mr. Jones says.
As part of its process of recertification of nonprofits, HUD issued Mortgage Letter 008 on March 3. The letter, "Nonprofit Participation in Single-Family FHA Activity," clarifies that FHA does not "approve" down-payment assistance programs by charitable organizations. It goes on to explain that lenders bear responsibility for ensuring that the loans meet HUD guidelines.
If HUD decides to stop accepting the Nehemiah program as a form of down payment on an FHA mortgage, it has agreed to provide Nehemiah with six months' notice, according to the Nehemiah Web site.
What about new-home builders? Is the program still viable?
"We are still using the program, but not to the extent that we used to," says Gerald Knight, sales and marketing director for Regal Homes in Prince George's County.
Mr. Knight says the builder had about six sales using the Nehemiah program out of about 51 total sales. "Financing is still a huge issue in this marketplace," he says. "It's a program to be applauded because it has certainly increased the homeownership for people who could not otherwise own a home."
"The problem with Nehemiah is that it's come under fire. FHA doesn't like the program. What happens is it becomes a nonconforming loan because the person gives less than 3 percent and the funds are in essence a gift."
"Sometimes, the particular arrangement is such that we think it creates problems down the road," Mr. Jones says. "Our concern is not only the ability to make the down payment, but to make regular payments."
None of this has kept Nehemiah from its mission. It has initiated on-line homeownership education courses to satisfy its educational requirement and ensure the success of homeowners.
Another recent tool is "The New Homeowners Handbook: What to Do After You Move In," which covers such basics as insurance, security, safety, budgeting and financial planning, home repairs and maintenance.
Homeowner fairs are another way it is getting the word out about its program. The Baltimore Convention Center will play host to a fair on June 10.

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