When was the Nehemiah Corporation of America founded?
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Nehemiah Corporation of America is a non-profit organization based in Sacramento, California specializing in homeownership, affordable housing and community development. It started in 1994 as a small organization, but grew to prominence later in the 1990s after it developed a program that allowed home buyers to make down payments on their purchases using funds that were derived from the home sellers. This program, the Nehemiah Program, became popular and was widely emulated, giving birth to what came to be known as the seller-funded down-payment assistance industry. The industry attracted criticism from U.S. federal agencies (particularly the Government Accountability Office and the Internal Revenue Service) and was ultimately shut down in 2008 by a change in federal law.
Nehemiah Corporation of America
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The Milken Institute performed a study of the Nehemiah Program and published a report on it in April 2004 (herein, the "Milken study"). Although the report did not explicitly identify the parties who had commissioned the study, its Acknowledgement page listed the Nehemiah Corporation of America, the United States Conference of Mayors, and CitiesFirst. The study generally found that the nationwide surge in home prices in the United States "created additional wealth" for recipients of the Nehemiah Program and that an expansion of homeownership had "positive tax consequences" for the counties in which the recipients lived.
Nehemiah Corporation of America
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In March 1997, the Nehemiah Progressive Housing Development Corporation filed for approval of its Nehemiah Program with HUD's Sacramento field office. (Here, "approval" means that lenders would have written assurance, via an "approval letter", that monies received by the borrower from the Nehemiah Program satisfied HUD's guidelines for gift funds.) Nehemiah received a provisional 60-day approval, followed by a six-month approval for a demonstration program. However, similar filings in other HUD field offices were not being approved, so Nehemiah filed for a nationwide approval at HUD's headquarters in Washington. When that approval was not forthcoming, Nehemiah sued HUD in a federal court.
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The Nehemiah Community Foundation was founded in 2000 and provides grants to various individuals and non-profit and faith-based organizations. The Foundation developed a Wealth Empowerment Program, which provides instructional and other resources related to individual finance and home ownership. In 1997, the Foundation created, and is a co-sponsor of, the Nehemiah Emerging Leaders Program, which facilitates management training for young adults in the Sacramento area.
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The Nehemiah Community Reinvestment Fund (NCRF) was founded in 1997. It provides funds (via loans and investment capital) to real-estate development projects intended to revitalize low income neighborhoods. As of the end of the 2013 fiscal year, the Fund had assets of approximately $11.0 million, about half of which were held in "program-related investments".
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In March 2001, HUD asked its OIG to re-examine the performance of FHA insured loans that received down-payment assistance from private nonprofit organizations. The OIG's report was published in September 2002 (herein, the "OIG 2002 report"). It found that the default rate for Nehemiah-assisted loans was about double that of other FHA insured loans. It also found that, although the number of loans that had received down-payment assistance from any private nonprofit organization (not just Nehemiah) was a relatively small percentage of the entire FHA pool (at about 4%), the percentage was increasing. For the most recent six months of the OIG's data collection, those loans represented about one in seven of all new FHA insured loans. The report also found that Nehemiah-assisted loans comprised about half of all private-nonprofit-assisted loans (in the full data period).
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Legislative responses began in early 2004, when a subcommittee of the House Committee on Financial Services held hearings on a bill that would create a so-called Zero Downpayment Program administered by the FHA. The president of the Nehemiah Corporation gave testimony at those hearings, expressing concern about a provision in the bill that would allow FHA to assess mortgage-insurance premiums that were higher than those required from borrowers who did provide a down payment. With those higher premiums, Nehemiah's president wrote, "we might as well simply continue to offer the zero down payment option primarily through the down payment assistance industry". The bill did not become law. Similar bills were introduced in 2005, 2006 and 2007, but also did not become law.
Nehemiah Corporation of America
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The Nehemiah Program is not to be confused with the Nehemiah Housing Opportunity Grants ("NHOP") program enacted in 1988 by Title VI of the Housing and Community Development Act of 1987. NHOP ceased operation in 1991 and was unrelated to the program described here.
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Since 2008, the Nehemiah Corporation has been operating as a social enterprise organization. Via its affiliates and subsidiaries, it has been providing real-estate development capital for low-income neighborhoods, as well as providing instructional and other resources related to individual finance and home ownership. It also sponsors management training for young adults.
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In April 2012, an "ex relatio" complaint was filed in a federal District Court against five mortgage banks. Although Nehemiah was not a party to this complaint, the allegations related to the banks' treatment of Nehemiah-assisted down payments. In July 2014, the court dismissed the claim, citing a lack of subject-matter jurisdiction.
Nehemiah Corporation of America