Some believe that the almost 200 charities, such as AmeriDream, that provide down payment assistance to first-time home buyers, make it more likely that home buyers will default on their loans.
It works like this: The home seller provides cash to the charity which then gives to the buyers as a down payment. The charities charge a service fee and the home seller recoups the cost of the 'donation' by charging more for their home. Home buyers that received this type of assistance were more than twice as likely to default or become deliquent than those who didn't.
The system has helped hundreds of thousands of low-income households to purchase their first home, even boosting the national home ownership rates to a near-record 69 percent in the last six years. According to the IRS, the practice is riddled with abuse inflating home prices and making it more likely for homeowners to default on their loans.
Read more of this article at WashingtonPost.com.
Know More about home ownership at PropertyMaven.com.
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