- The Washington Times - Friday, May 10, 2002

Taking the first step toward a major lifestyle change is always difficult, and changes that involve financial decisions can be particularly stressful.

Consumers often find the home buying process overwhelming and may worry that their income and savings are too low to qualify for a home loan. Others fear past credit problems or have yet to establish credit and wonder how this will affect their ability to buy property.

Nonprofit and charitable organizations offer home buyer seminars and counseling programs to help consumers determine if they are ready to buy a home and how to prepare for homeownership.

Many programs continue with financial counseling after the participants have bought a home to ensure that they are able to keep their home.

Besides counseling, some programs actually obtain funds for down payment and closing costs, or direct their clients to organizations that will be able to provide them with assistance.

The Department of Housing and Urban Development maintains a list of approved housing counseling agencies in the District, and Maryland and Virginia have housing authorities that also can provide assistance.

HomeFree USA, a Washington-based nonprofit organization founded in 1994 by Marcia Griffin, has assisted close to 1,200 families in buying a home. The program offers 17 to 22 classes per month in money management, savings and preparing for homeownership, according to Marvin Adams, vice president of HomeFree USA.

"Our claim to fame is that we have a 100 percent success rate," Mr. Adams says. "It may take three weeks or three years, but every one of our clients has eventually bought a house. We help people resolve credit problems and teach them about financial planning and everything they will need to buy a home. Then when they actually buy a home, we hold post-purchase classes and monitor their finances. Not one of our clients has ever lost their home to a foreclosure."

HomeFree USA counselors work with potential buyers to help them find down payment and closing cost assistance through local programs on a one-on-one basis.

"The average time we work with a customer is four months, but often the process can take longer than that," Mr. Adams says. "We start with a mortgage profile, during which we run a credit check on the client and talk about their finances. At the end of this first step, we can usually estimate how long it will take to obtain a loan. We work with each family or individual on their 'One-on-One Achievement Plan.'"

HomeFree USA has no income restrictions on their clients and operates primarily as an education program.

"We also have under our umbrella Homebuyers Realty, but our clients are under no obligation to use one of the 20 agents in this group," Mr. Adams says. "About 75 [percent] to 80 percent of our clients choose to work with Homebuyers Realty to find a home. We introduce our clients to lenders and teach them about predatory lending practices so they can avoid those types of loans. We also solicit funds for our clients for down payment and closing cost assistance. Some of these are grants and some of them have to be paid back, but there are all sorts of first-time buyer assistance programs out there to help people get into a house."

The AmeriDream Charity Inc. is a nonprofit charitable institution that operates a down payment gift program along with a community redevelopment program.

"We are different from a home buyer counseling program in that we actually provide home buyers with a gift of up to 5 percent of the purchase price of their home to use for a down payment or closing costs," says Christopher Russell, chief executive officer of AmeriDream.

"Basically, the program requires only that the buyer choose a home from a builder or seller enrolled in the program, qualify for a loan that allows gift funds, and make an application to us which proves their financial need," he says. "Usually, when a buyer finds a home, the seller will be willing to enroll in the program. Builders and sellers who enroll their homes in the program have access to a broader pool of potential buyers because they have eliminated the need of a large down payment by the buyer. The sellers or builders pay a service fee upon settlement."

AmeriDream has assisted more than 50,000 individuals and families since it was founded in February 1999. Currently, the organization averages 4,000 down payment assistance gifts (which are not required to be repaid) each month. More than 40 percent of the funds are distributed to minority home buyers.

Mr. Russell says, "After selling real estate for six years, I wanted to start a home buyers education program. I discovered that the biggest obstacle to ownership was obtaining down payment funds. My experience with some of the state-run and locally run government programs was that they were too bureaucratic. I tried to streamline this program as much as possible."

AmeriDream has no income limitations, but home buyers must purchase a home priced within the Fannie Mae/Freddie Mac guidelines for a conventional mortgage loan, currently allowing up to $300,700 for a single-family home.

"The average national sales price for a home in our program is $96,000, and the average family income is $34,000," Mr. Russell says. "Our program is not restricted to first-time home buyers, either. When I first started working in real estate, it was a down market, and I saw families who needed to sell their town homes to move to another area and were forced to rent because they lacked any profit to use for the next house. We feel that we want to do anything we can to support ongoing homeownership. Homeownership can be a way to pull people out of poverty, and it can work as enforced savings."

AmeriDream is creating a home buyers' counseling program of its own. Meanwhile, the organization refers callers to other programs that will help its clients with budgeting and preparing for the requirements of homeownership.

Eric Gutierrez, housing director for the Latino Economic Development Corp. (LEDC), provides pre-purchase and post-purchase counseling for families including referrals to lenders and Realtors who are familiar with the District's Home Purchase Assistance Program (HPAP).

"We meet with clients and do a needs assessment and work out a budget," Mr. Gutierrez says. "The HPAP program can provide low- and moderate-income clients with up to $20,000 in closing costs and down payment assistance, as long as they qualify for the program and are first-time home buyers. We work with our clients to prepare them to meet with a lender, including the financial package they will need to bring: tax returns, employment letters, birth certificates for kids under 10, etcetera."

LEDC holds homeownership classes in every subject, including teaching its clients about preventive maintenance and budgeting for an emergency.

"Some of our families come in already prepared with the documents they will need to see a lender and with the knowledge they need, but others are not organized and don't value the importance of financial documents," Mr. Gutierrez says. "For those families, we guide them through the process of obtaining copies of taxes and employment letters. It can be an extensive process, anywhere from a few weeks to six months or more. We work with Bank of America, Citibank, Wells Fargo and SunTrust to obtain loans for our families."

"Language is essential to the process," he says. "Not only do people need to be able to communicate in their own language, but the whole process must be explained in layman's terms so that people understand it. We have Realtors, lenders and home inspectors come in and do conferences for us in Spanish to make clear what the home purchase process entails."

The HPAP guidelines for 2002 for down payment and closing cost assistance vary according to the size of the family, and the amount of help varies according to the income level. A family of four in the District can receive low-income assistance if their income is less than $45,750, and moderate-income assistance if their income is no more than $73,200.

"The HPAP program is an excellent vehicle for a low-income family to purchase a home," Mr. Gutierrez says. "The problem is that there's not enough affordable housing out there. Even though a family can qualify for a loan, sometimes they cannot qualify for a loan high enough to afford a home where they want to live."

No income limitations are placed on consumers who want to use the services of the nonprofit Consumer Credit Counseling Services (CCCS) of Greater Washington.

"We have 11 branch offices in Maryland, D.C. and Northern Virginia, plus a 24-hour, 800 number for people to get financial advice," says Laura Fye, housing director for CCCS. "We offer pre-purchase counseling sessions for first-time home buyers, which are typically in a workshop setting and last for several hours. As part of the session, buyers receive a 'Keys to Homeownership' workbook which helps the attendees understand their current financial picture. At the end of the session, when they've completed the worksheets, they can determine how much house they can afford to buy."

According to Ms. Fye, "These pre-purchase workshops help people understand the gravity of what they are doing and what the rules are. We also do pre-foreclosure counseling, trying to help people determine their options when they are in financial trouble."

CCCS does not provide its clients with down payment or closing cost assistance, but it teaches people how to get that assistance locally through nonprofit or government programs.

A variety of home buyer assistance programs exist in the Washington area, and any consumer thinking of purchasing a home for the first time could find the information he needs at one of these programs and perhaps a little necessary financial aid, too.

More info:

List of housing counseling agencies in the District approved by the Department of Housing and Urban Development

Neighborhood Reinvestment Corp.; 202/220-2300; www.nw.org.

Near Northeast Community Improvement Corp.; 202/399-6900; no Web site.

Peoples Involvement Corp.; 202/797-3900; www.piccdc.org.

University Legal Services NE, 202/547-4747; University Legal Services SE, 202/645-7175; www.dcpanda.org.

District of Columbia Housing Finance Agency; 202/777-1600; www.dchfa.org.

Marshall Heights Community Development Corp. Inc.; 202/396-1200; www.mhcdo.org.

Greater Washington Urban League; 202/265-8200; www.gwul.org.

Housing Counseling Services Inc.; 202/667-7006; no Web site.

Consumer Credit Counseling Service of Greater Washington; 202/682-1500; www.debtfreeforme.com.

National Council of La Raza; 202/785-1670; www.nclr.org.

HOMEFREE USA; 202/526-2000; www.homefreeUSA.org.

Acorn Housing Corp.; 202/547-9295; www.acornhousing.org.

Catholic Charities of the Archdiocese of Washington, D.C.; 202/526-4100, Ext. 206; www.catholiccharitiesdc.org.

Congress of National Black Churches Inc.; 202/296-5637; www.cnbc.org.

Lydia's House; 202/563-7629; no Web site.

Latino Economic Development Corp.; 202/588-5102; www.ledcdc.org.

Other home buyers assistance programs:

AmeriDream Charity Inc.; 301/977-9133; www.ameridreamcharity.org.

Maryland Department of Housing and Community Development; 800/756-0119; www.dhcd.state.md.us.

Virginia Housing Development Authority; 800/968-7837; www.vhda.com.

Federal Home Mortgage Corp. (Freddie Mac) Foundation; 703/903-2000; www.freddiemac.com.

Fannie Mae Foundation; 800/7Fannie; www.homepath.com.

Habitat for Humanity; 202/628-9171; www.habitat.org.

District of Columbia Housing Authority; 202/535-1445; www.dchousing.org.

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