Fault the Nehemiah Corp. for excessive loan defaults, but not for what the non-profit is doing to help return decaying neighborhoods to the prosperous communities they once were.

The nation's leading provider of downpayment gift assistance has been taken to task by the Department of Housing and Urban Development's Inspector General's Office for backing too many home buyers who can't make their house payments.

But in recent weeks, the Sacramento-based Nehemiah has raised the bar for all groups which help provide the seed money that enables thousands of otherwise qualified families to take that all-important first step up the ownership ladder.

Nehemiah has donated $1 million to HomeAid America to help fund the creation of local chapters to help fulfill its mission of building and renovating shelters for the temporarily homeless throughout the country.

It also raised $26 million in first-round financing for a real estate equity fund to invest in mixed-use development projects in low and moderate-income neighborhoods throughout a six-county Sacramento region as well as in Lodi, Stockton and Modesto, Calif.

Only the third equity fund of its kind in the Golden State and the first in the state's capital region, the Nehemiah Sacramento Valley Fund will provide long-term financing to for-profit and non-profit developers dedicated to building mixed-use affordable housing and commercial facilities in underserved markets.

It also will back "inner city" shopping centers and office projects that don't have a housing component. The fund "is a significant part of our organization's overall strategy to encourage urban renewal through comprehensive, geographically-focused redevelopment," said Nehemiah's president, Scott Syphax. The fund will act as a vehicle that will not only allow investors to achieve significant financial returns but also permit them to support the communities they serve, Syphax said.

The new fund will be managed by Pacific Coast Capital Partners and modeled after the Bay Area Smart Growth Fund, which also is run by PCCP, and the Genesis LA fund. Investors include Washington Mutual, Wells Fargo Bank. California Federal Bank and the California State Automobile Association. "Investing in inner-city communities within the Sacramento Valley is critical to the economic growth and stability of our state capital as well as the state," said a Pacific Coast Capital spokesman.

"There is a tremendous amount of buying power in these neighborhoods as well as a strong employment base. We are confident the organizations that participate in the fund will realize a real return in their investments." The fund expects to close on a second and third round of equity investment funding by June. In addition to the direct dollar contribution to HomeAid, which will made over a four-year period, Nehemiah and HomeAid have agreed to partner special needs transitional housing projects through the Nehemiah Urban Land Trust.

The Trust will purchase facilities that house supportive housing social service agencies.

Nehemiah, which has provided more than $421 million in downpayment assistance since its inception in 1997, helping some 125,000 families achieve home ownership status in the process, has several partnerships like the one it is forming with HomeAid.

It is involved with the U.S. Conference of Mayors in a venture called CitiesFirst, a program dedicated to creating affordable housing opportunities. And it has partnered with Habitat for Humanity. The pact "will be instrumental in helping is continue to provide new hope for even more men, women and children," said HomeAid's Michael Lennon.