Nehemiah President Calls for Essential Revisions to the Zero Down Payment Act

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Scott Syphax tells Congress changes are necessary to help lower income families
RISMEDIA, March 24-In testimony before Congress today, Scott Syphax, president and CEO of The Nehemiah Corporation of America, the national down payment assistance organization, called for revisions to a proposed zero down payment assistance bill.

Syphax applauded the Bush Administration and Congressman Patrick Tiberi (R-OH) for their leadership in taking a positive public policy step toward eradicating the notion that a down payment is a prerequisite of becoming a homeowner, but called for essential revisions to better protect consumers.

He was one of several key industry leaders who testified today before the Housing and Community Opportunity Subcommittee regarding H.R. 3755, The Zero Downpayment Act of 2004.

“Our industry has grown so quickly because it plays a vital role in helping people overcome what I believe to be an artificial barrier to homeownership — the down payment,? Syphax said. ?I have long felt and stated publicly that the removal of the down payment obstacle to homeownership for credit worthy applicants should be a national priority. Indeed, I applaud the Bush Administration and Rep. Tiberi for taking bold leadership in this area.”

However, Syphax said that changes to the bill were needed if the legislation was to best protect the working families of America. He stated, “…[O]ur primary concern with the current draft of H.R. 3755 is that the burden of coming up with a down payment is shifted back onto the consumer through increased costs. As I understand it, the program will be funded through increased surcharges, potentially higher mortgage rates and mortgage insurance premiums ? all paid for by the homebuyer. Nehemiah is very concerned that these increased costs will expand the risk that families utilizing the program will not be able to meet their mortgage obligations.”

?Unlike families who today use privately funded down payment assistance, under the proposed new system, homebuyers could move into a home in which they have negative equity of up to eight percent. Under this scenario, when a homebuyer goes through economic hardship the homeowner may be more willing to simply walk away from the home and let the lender foreclose. Whereas, a family that receives a down payment assistance gift has equity from day one and, consequently, a real incentive to stay and fight to keep their home,” he added.

Syphax called for:

* No additional monthly surcharges on the homebuyer

* A limitation on premium pricing mortgage rates associated with these homes and homebuyers

* A hard cap on mortgage insurance premiums increases

?I believe with these changes H.R. 3755 will fulfill its goal of increasing homeownership for low and moderate income Americans, while protecting the government’s understandable interest in limiting occurrences of default,” he said.

In addition, Michael F. Petrie, CMB, chairman-elect of the Mortgage Bankers Association (MBA), also testified today before the House Financial Services Committee Subcommittee on Housing and Community Opportunity, stating MBA?s support of H.R. 3755.

?MBA supports the FHA zero-down-payment legislation because many families have the income to make mortgage payments and have a good credit record, but can’t achieve the dream of homeownership due to the hurdle of a down payment,? said Petrie. ?Despite a record U.S. homeownership rate today, the minority homeownership rate still lags behind. MBA believes that H.R. 3755 will be an important tool in increasing minority homeownership nationwide.?

Petrie noted during his testimony that while the FHA program authorized under H.R. 3755 will not be the first zero-down-payment mortgage product in a competitive mortgage marketplace, MBA believes it will be the most broadly applied. It will reach minority and low- and moderate-income populations at the highest rates, without strict geographic or credit scoring criteria.

For more information, visit http://www.nehemiahcorp.org

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