Former Nehemiah Director Says DPA Not a Scam

The former regional director of a downpayment assistance provider rejects characterizations of downpayment aid, now banned by the Federal Housing Administration, as a scam, saying it instead has been an opportunity for those with strong credit records and solid jobs who found themselves short of the cash needed to close a loan. The aid served a need because 20%-30% of denials were because of borrowers not having cash to close, said Algernon H. Penn, previously a regional director with downpayment assistance provider Nehemiah Corp. of California, in a letter to National Mortgage News about an item that appeared Dec. 1 on its website. He said that FHA did benefit from downpayment assistance in the form of an increase in the size of its loan pool and revenues. HUD had guidelines for the program in its 4155 handbook that Nehemiah used to design its program and this has been validated in court, said Mr. Penn, who is now president of the Penn Consulting Group. He said downpayment assistance loans performed poorly because of a lack of requirements his company had but others did not, including a dearth of homebuyer education and abuse of what was supposed to be nonprofit intent as well as unchecked appraisal inflation. (Mr. Penn's letter will appear in the Dec. 7 print edition of NMN).