If implemented as written, this ruling will end The Nehemiah Program and similar programs. The Subcommittee on Housing and Community Opportunity, lead by Chairwoman Maxine Waters (CA), held a hearing on Homeowner Downpayment Assistance Programs and Related Issues at the Rayburn House Office Building in Washington, D.C. on June 22, 2007. The purpose of the hearing was to address public interest in this issue and answer questions surrounding downpayment assistance programs offered in communities across the United States.

Meg Burns of HUD confirmed that the proposed rule stems from HUD's concern that privately-funded downpayment assistance inflates home appraisals, causing higher default rates which will impact the FHA Insurance Fund.

Every Subcommittee member suggested that HUD withdraw the proposed rule and implement regulation to monitor privately-funded DPA programs in order to increase its effectiveness.

Subcommittee Chairwoman Maxine Waters (CA) suggested that HUD extend the July 10 comment period deadline on the proposed rule for another 30 days. Representative Waters also recommended adding language to a FHA reform bill (H.R. 1852) that would override HUD's proposed DPA rule. Ms. Waters, along with several other committee members were concerned that HUD was trying to exchange downpayment assistance for the "zero down" loan product included in H.R. 1852.

Nehemiah will continue to update you on any new developments.

To view the archived hearing webcast and read testimony from the hearing, click on the link below.

Nehemiah’s Position

The testimony during the hearing renewed Nehemiah's plea to have industry regulation or guidance from HUD. The Subcommittee unanimously agreed.

Downpayment assistance has been responsible for creating over 500,000 low-and moderate-income (LMI) homeowners since 1997 and represents approximately 40% of the FHA current mortgage portfolio.

The performance of privately funded downpayment assistance could be significantly improved by imposition of industry wide performance standards that support successful homeownership, and the lack of standards and best practices for the last decade means that as successful as downpayment assistance has been, its performance would have been greatly enhanced by the best practices and program requirements that groups have individually and collectively advocated.

"Downpayment assistance creates instant equity for the homeowners."

Rep. David Scott, GA

“Let’s not throw the baby out with the bath water.”

Rep. Gary Miller, CA

"Regulate it appropriately and make it work."

Rep. Al Green, TX

“Amend it; don’t
end it.”

Scott Syphax, Nehemiah President and CEO