AmeriDream Helps People Buy and Keep Their Homes

	Past 30 Articles Email this Page Print Friendly Version

" The single biggest problem many people have when it comes to buying a house is raising enough money for the down payment," explains Ann Ashburn, AmeriDream's president and CEO. " We are able to give them that money." Since the organization started in 1999, it has given down payment funds to more than 140,000 homebuyers across the country--40, 000 of them last year. The money for down payments and other services AmeriDream offers " comes from a self-generating pool of funds." Most of it comes from sellers.

The AmeriDream program " doesn't work for everyone, or in every real estate market," Ashburn adds. " This is not a one-size-fits-all program. It typically works best is when sellers need help to sell their homes. There also have to be qualified people who want to buy the house and who can afford to make the monthly payments, but who cannot raise the money for the down payment. The seller has two choices. The first is to wait until the house sells no matter how long it takes. The second is to register with AmeriDream."

While sellers have to register for the program, buyers usually learn about it from their lenders. " Your lender pre-qualifies you," Ashburn explains. " If you qualify for everything but have no down payment, the lender can call us." For more information, go to the AmeriDream web site at http://www.ameridream.org/.

Sellers who register with AmeriDream agree to give the program an amount of money equal to the down payment, typically around 3 percent, plus a service fee. They do not give that money to AmeriDream, however, until after the house is sold and the deal has closed. Sellers do not actually make the down payment for the buyer. Instead, they put money into a pool that can be used by another homebuyer down the line.

What do sellers get for their donation? First, they have a much bigger pool of potential buyers. Second, according to Lori Forcey, AmeriDream's communication director, " The donation may be tax deductible as a selling expense." She advises people to check with their tax advisors to make sure. Third, they do not have to negotiate. If the house is listed at $111,973 that is exactly the price they will get. Once the appraiser and lender agree that the listed price is fair, the price is set. If the buyer wants the house, he or she has to meet that price. Period.

This brings us to DreamKeeper, AmeriDream's new mortgage protection program that started just last month. It is not open to those who bought a home through AmeriDream before the program began. " The program is for five years, and it covers involuntary unemployment and disability," Ashburn explains. " Your normal mortgage payment will be paid up to $2,000 a month. There are a lot of one-year programs out there that cover only unemployment. We cover both unemployment and disability, and we cover them for five years because studies have shown that foreclosures usually occur during the first five years of homeownership."

The seller actually gets a break under the new program, too. For a standard AmeriDream program, the seller would donate the down payment plus a service fee based on the cost of the house. That fee will never be greater than $500. The DreamKeeper program requires only a $185 service fee from the seller on top of the down payment donation. Forcey explains that the lender will donate 1 percent of the total amount of the loan to AmeriDream. So for a $100,000 mortgage, the lender would donate $1,000. It's to the lender's benefit because it reduces the chance of foreclosure. " It's a form of mortgage insurance for the lender." Forcey says that the borrower can choose not to sign up for the free DreamKeeper program, but she added she could not imagine why anyone would refuse it.

What happens if a couple buys the house? Who is insured? When a couple signs the paperwork, they have two choices. The program applies to the principal income earner, or it can be split 50-50. Let's say the husband is the primary earner and he's the one covered. If he were laid off, the automatic payments would begin even if his wife were to get a job. It would be the same if the roles were reversed and the wife were the designated breadwinner and she got laid off or injured. If they are both working and choose a 50-50 split and one of them is injured or laid off, AmeriDream would pay one-half the monthly mortgage payment, and the still-working partner would pay the other half. These payments could continue for up to five years or until the homeowner was able to find another job or became healthy enough to return to work.

" Our typical buyers get a mortgage backed by the Federal Housing Administration to buy a $115,000 home," Forcey says. " Some are first-time buyers, but not all of them. They are a mix of ages and races, singles and families. We operate across the country, but we tend to do most of our business in buyers' markets--where the seller needs help to sell the house. It doesn't work in a seller's market where there are more buyers than there are homes for sale." As with the previous AmeriDream program, sellers get help selling and buyers get help buying their homes. With the DreamKeeper program, buyers also get help keeping them.