- The Washington Times - Monday, June 23, 2003

Later this month, Maurice and Samantha Johnson will be moving out of a relative’s house and into their own four-bedroom home.

The Johnsons were able to buy the house in the New York borough of Queens through a program that helped them get a mortgage with no down payment and no closing costs.

For thousands of Americans — especially young couples, low-income working families and immigrants — the biggest barrier to homeownership is their inability to save enough money for a down payment.

A number of nonprofit groups, community organizations and private companies are coming up with special grants and “no down payment” mortgages to help them over that hurdle.

Mr. Johnson, 27, who works in the insurance industry, got help from the Neighborhood Assistance Corp. of America.

He attended a workshop, then worked with one of the group’s counselors to reduce his debt and improve his credit score so he could get a no-down-payment mortgage through NACA.

His 30-year, fixed-rate mortgage carries a manageable interest rate of 4.375 percent.

“They put you on a budget to make sure you’re able to qualify for a house and can afford to handle the mortgage you’re looking for,” said Mr. Johnson, who has a 6-year-old son and a 1-year-old daughter.

NACA, a nonprofit group with offices around the United States, just received a $3 billion infusion from CitiMortgage, a subsidiary of Citigroup, to expand its no-fee, no-down-payment mortgage program.

“The reality is that many working people can’t save a lot because it costs so much to raise a family and live day to day,” said NACA Executive Director Bruce Marks. “But they’re a good risk. Working people will do whatever it takes to stay in a home.”

Karen Dailey, 41, a free-lance graphic artist, said NACA counseling and down-payment help gave her the confidence to buy a cooperative apartment in New York. “I had been looking, but it was discouraging because I worried I just couldn’t afford it,” she said. “But I got a 30-year mortgage with payments I know are manageable.”

No-down-payment mortgages are not available only through nonprofit groups. Conventional lenders are writing them, too.

Jerome F. Kinney IV, a vice president at the Federal National Mortgage Association, or Fannie Mae, the D.C. company that buys and sells mortgages, said several programs have been started to help families who can’t make the traditional 10 percent to 20 percent down payment.

Fannie Mae’s “expanded approval” and “flex 100” programs cover mortgages up to 100 percent of the value of a home.

Home buyers must come up with the equivalent of about 3 percent in cash toward closing costs, but that can be from a grant, Mr. Kinney said.

“We work through lenders all over the country, from banks with a national presence to local banks, savings and loans and mortgage bankers,” he said. He suggested that would-be borrowers “shouldn’t be afraid to ask any lender if low or no-down-payment products are available.”

Some lenders have come up with hybrid programs.

GMAC Mortgage, for example, offers what it calls a HomeStretch loan, and more than 6,800 have been written so far.

Richard A. Gillespie, GMAC Residential’s chief marketing officer, said the way it works is that a family gets a Federal Housing Administration-insured mortgage to cover about 98 percent of the home’s purchase price.

GMAC then adds what amounts to a second mortgage to cover the down payment and closing costs. The second mortgage is forgiven starting in the sixth year if the family has kept up its payments, he said.

“We’re working on other products,” Mr. Gillespie said. “One would be similar to HomeStretch but work with conventional mortgages … and another will be geared to immigrant families.”

The faith-based charity Nehemiah Corp. sponsors one of the nation’s largest down-payment assistance programs. It has provided down-payment grants to 150,000 families over the past six years.

“A lot of people have moms and dads who can help with a down payment,” said Nehemiah’s president, Scott Syphax. “But there are hundreds of thousands of families whose moms and dads are not in a position to help out. Well, we can.”

Buyers, often identified by home builders and real estate agents, first must qualify for FHA or conventional loans.

“We ask them to take a homeownership education course,” Mr. Syphax said. “Then we will gift them between 1 and 6 percent of the sales price.”

One home buyer who received help from Sacramento, Calif.-based Nehemiah was Stephanie Jumper, 28, who works in publishing in Indianapolis. A single mother, she wanted to buy a home so her 9-month-old son, Noble, “would have a really decent place to grow up.”

A grant from Nehemiah to cover the down payment and closing costs let her buy a new three-bedroom rancher.

“I wanted to be in a house by the time he was walking, and we made it,” she said.


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