Nehemiah's End Would Deal Blow to Homebuilders

Fresno, CA — October 1, 2008
By: By Sanford Nax, The Fresno Bee

Homebuilders in the San Joaquin Valley, already facing one of their toughest years in decades, were confronting even more challenges Tuesday with the pending elimination of a popular program that provides financing for buyers.

A down-payment assistance program by Nehemiah Corp. of America was to end at 11:59 p.m. Tuesday, although representatives of the Sacramento-based nonprofit were in Washington, D.C. in a last-ditch effort to pass legislation that would keep it alive, said Kevin Koenig, the company's director of outreach.

The program was ending because legislators are worried about lenders making unsustainable loans. An effort is under way to revive it with changes that would install more safeguards. The hope is to include it in a massive bailout bill being considered in Congress.

Nehemiah has provided $8.6 million in seller-funded, down-payment assistance to 1,166 families in Fresno County since 1997. It is an important source of financing for home buyers in the Valley, said John Bonadelle, president of the Building Industry Association of the San Joaquin Valley.

"It's a huge deal," he said. "A good portion of our sales and the sales of other builders were with that program."

If the program ends, builders will be less able to compete with foreclosures that are dominating the marketplace, Bonadelle said. Foreclosed houses often are sold at reduced prices.

At the same time, developers are having to cope with the effects of an increase in the mandatory down payment of a borrower using the popular FHA loan. The down payment climbed from 3% to 3.5%, which could knock some customers out of contention.

Facing the worst market in years, builders have slashed production, have downsized their companies, are retreating to their core markets and, in some cases, are going out of business.

The reporter can be reached at snax@fresnobee.com or (559) 441-6495.

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For additional information, please contact Shelley Mitchell, smitchell@nehemiahcorp.org, 916-231-1999.

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