While those Buyers who had a down payment were in a position to negotiate on price, other good-credit mortgage-qualified buyers without a down payment weren’t able to buy at any price, or WORSE, they were left to the extremely risky, adjustable-rate, high-cost, zero-down programs of the sub-prime lenders who, by FAR, have been the major contributors to the mortgage melt-down.

To Sellers who were willing to negotiate on price and terms, legitimate DPA programs like AmeriDream were an option for Sellers to be able to sell their homes to good-credit, mortgage-qualified Buyers who lacked the down payment. An example would be a Seller of a home priced at $100,000 who has expressed willingness to negotiate a 4% price reduction.

A 4% reduction in the home’s sale price to a buyer who HAS a down payment could result in a $96,000 sale to the Buyer, but a 4% reduction in the price to a Buyer who does NOT have the down payment would result in NO SALE…unless the Buyer succumbed to a risky and high-cost sub-prime loan provider.

By enrollment in a DPA program, a Seller has an alternative to lowering the price that would result in a sale by offering to sell the home for $100,000- the Seller’s full asking price- to include a 3% gift of down payment to a good-credit, mortgage-qualified Buyer from a 501(c)3 non-profit organization. The DPA would provide a 3% gift of down payment- one that had no repayment requirements or surprises- so the Buyer could get a $97,000 mortgage. The Buyer would close with 3% equity in the property using the gift funds in combination with the lender’s loan proceeds from a very safe and secure, financially-friendly HUD insured FHA mortgage. The down payment money did NOT come from the Seller. It came from a pool of funds from the DPA provider that has been raised in part from previous participating Seller Enrollment fees.

After closing, the Seller paid a service fee in accordance with the DPA provider Enrollment Agreement. The service fees paid by Sellers resulted in the Seller realizing almost the same sales proceeds as if he’d sold the home at a reduced price to a different Buyer who had the down payment, and offered a flow of revenue to the legitimate DPA providers that served would-be and post-purchase homebuyers with an array of free homebuyer education and certification resources, home retention and loss mitigation services and counseling, a tremendous resource for charitable giving to housing-related charities in addition to the ensuring the availability of gift funds for future home buyers.

Legitimate DPA providers like AmeriDream strongly urged against practices that would financially jeopardize Buyers, increase Lender Risk, or create credibility issues between sellers, realtors, lenders, and appraisers. The result is that more than 95% of Buyers who used legitimate DPA gift funds to buy homes continue to this day to demonstrate responsible home-ownership and make their mortgage payments.

The abuse of any program designed to help people is wrong, but the solution to the abuse by a few is NOT to throw out legitimate programs like AmeriDream, but to make it costly to be an abuser!

Bruce Curtis
St Augustine, FL