Yearning for a brand, spanking new home but don't have any cash for a downpayment? That may no longer be a problem under a new "strategic partnership" announced this week between the Nehemiah Corp. and the Homebuilders Financial Network.

Under the terms of the alliance, Nehemiah will offer downpayment assistance to cash-starved buyers who have their eyes on houses built by any of the 20 builders throughout the nation whose in-house mortgage operations are run by HFN.

Nehemiah will provide the seed money in the form of a grant that need not be paid back by the buyer. But the funds will come from the builder as a charitable gift to Nehemiah.

Thomas Meyer, president chief executive officer of HFN, estimates that the downpayments for as many as 25 percent of the mortgages his company originates on behalf of its builder-clients come from grants from non-profits such as Nehemiah.

"Down payment assistance has become a huge aspect of our business," Meyer said. "And Nehemiah is certainly the Cadillac of that group."

HFN's clients include such well known national and regional builders as Beazer Homes, Schuler, Dominion and Dura. They work in nearly 50 different major markets and have a combined sales volume in excess of $5 billion a year. The 20 companies expect to build about 24,000 houses this year alone.

"By working with the Nehemiah, we are expanding the number of qualified buyers for our builder partners," said Meyer, adding that builders are looking for "any resource" they can find to help speed up transactions, reduce their carrying costs and increase their profits.

So much so that they are willing to contribute 3-4 percent of the selling price to Nehemiah and other downpayment assistance programs, which, in turn, gift a major part of that to the buyer at closing. The remainder is kept by the non-profit to cover administrative costs and to perhaps run their other housing programs.

DPA programs have come under fire in the past because the seller sometimes inflates the price of the house so that the net proceeds from the transaction are equal or close to what the gain would have been had he not donated a big chunk of his profit so the buyer could close.

But HFN Vice President Mark Dallal said builders are not doing that. "Their carrying costs decrease so dramatically (when they offer assistance) that their is no need to raise the price," he said. "In fact, it make sense economically to provide downpayment assistance."

Scott Syphax, president and chief executive officer of the Nehemiah Corp., said the partnership will result both in increased profits for HFN's builder clients and the extension of home ownership to thousands of new buyers. Nehemiah is the country's largest down payment assistance program, giving free down payment gifts to over 100,000 families and individuals who are now proud homeowners.

Nehemiah's doesn't provide down payments for just anyone, though. Candidate must have the income and credit worthiness to purchase a home. Also, properties purchased using the Nehemiah program must be financed with mortgage insured by the Federal Housing Administration.

Ian McCarthy, president of Beazer Homes, one of the nation's ten largest builders, said his company is always looking for "creative and innovative solutions" such as downpayment assistance to serve the needs of first-time home buyers.

"Through Beazer's strategic alliance with HFN, we are able to offer Nehemiah's down payment assistance program to our home buyers, thereby making the American dream of home ownership become a reality for more of our neighbors," McCarthy said.

HFN creates and manages in-house mortgage origination operations that typically increase a builder's profits by 15 to 25 percent. The philosophy behind HFN is to provide services to builders that will increase their control over the mortgage loan process, provide ease of "one stop shopping" for the buyer and increase bottom line profits for the builder when selling homes. According to the company, builders earn more than $1,900 in added income per financed sale.

For more articles by Lew Sichelman, please press here.

Published: January 31, 2002

Use of this article without permission is a violation of federal copyright laws.

When Lew Sichelman first started writing about housing in 1969, he was the youngest real estate writer in the country. Now, 37 years later, he's one of the oldest -- and most decorated. He has been rated the top housing columnist in the country by the National Association of Realtors as well as by his peers in the National Association of Real Estate Editors. Indeed, NAREE has recognized his work on numerous occasions. One year - due to his advancing age, he can't recall which one - he earned top honors in the annual NAREE Journalism Contest in three out of the four major writing categories. It was the first time one writer has won so many NAREE awards in a single year. Known for his ability to make even the most difficult topics understandable, Sichelman also has been honored by the National Association of Home Builders and the Mortgage Bankers Association. He began providing in-depth coverage of and consumer-oriented information about housing and housing finance at the Washington Daily News, where he was real estate editor. He held that same position for nine more years at the Washington Star, which purchased the News in 1972. The Star, a so-called "writer's newspaper" which also had the misfortune of being an evening paper, was put out of its misery in 1981, and Sichelman, who had begun self-syndicating his column in 1978, decided to become a full-time columnist. Today, his column, "The Housing Scene," is distributed by United Media to newspapers throughout the country. He also is on the staff of National Mortgage News, an independent newspaper which is considered the bible of the mortgage business. And he writes for numerous other publications, including MarketWatch.com, where he answers readers questions once a week, Sports Illustrated (don't ask), RealtyTimes.com, BigBuilder and others. Sichelman is married, the father of five and grandfather of eleven.