Black History and the Origins of Transaction-Based Down Payment Assistance

Across the nation, people seeking down payment assistance to purchase homes now have numerous options. In fact, there are currently hundreds down payment assistance programs available nationwide.  Most of these programs are “Transaction-Based,” meaning that the funds used to provide down payment assistance to the home buyer are somehow derived from the real estate transaction itself.  This was not always the case.  Prior to the creation of what is now referred to as “Seller-Assisted” down payment assistance, government grants or funds from family members were the almost exclusive source of down payment assistance.

In June of 1994, a nonprofit named Nehemiah Progressive Housing Development Corporation (after the biblical Nehemiah) was organized with seed capital from the Antioch Progressive Baptist Church of Sacramento, an African-American church whose founders included Clifton and Irene West, the parents of the world renown African-American theologian and historian Dr. Cornel West. Antioch’s mantra, “We Dare to be Different” was its impetus to sponsor Nehemiah as part of a “social gospel” edict to be responsive and relevant to the holistic needs of the community.

In 1996, Nehemiah developed the “seller-assisted” down payment assistance model in the African-American dominant Meadowview community of South Sacramento.  The “Sacramento Experiment” subsequently evolved into what became known as the “seller-assisted” down payment assistance model,  “The Nehemiah Program” or the “Nehemiah Model.”

Much has been misstated, intentionally or otherwise, about the origins, purpose and integrity of the original model.  In fact at various points in time, The Nehemiah Program has been denigrated as a “scam” or as having created problems in the mortgage industry.  However, in celebration of Black History Month and for purposes of revealing truth, I am republishing Nehemiah’s Official Response to HUD’s Proposed Rule Change  that would have eliminated the Nehemiah Model in 1999.  This document, (which is an excerpt of the full response) reveals several “inconvenient truths.”  Among them are (1) that Nehemiah advocated from the very beginning that FHA regulate the seller-assisted model, (2) that Nehemiah obtained a legal opinion from the General Counsel of HUD finding that The Nehemiah Program complied with FHA guidelines before expanding its program nationwide, and (3) that FHA consistently disregarded Nehemiah’s efforts to request new regulations to better protect both home buyers and the FHA insurance fund. It’s all in there.

History will reflect that, in spite of these  facts, many have attempted to castigate both The Nehemiah Program and the “seller-assisted” down payment model.  Such a characterization is patently unfair and historically inaccurate.

As is often the case with initiatives that are born out the African-American community, if we don’t tell our own story, it often will not be told or will be grossly misrepresented.  Along with this post, I will be posting on Instagram for the remainder of the month to share historic truths about Nehemiah, The Nehemiah Program and its foundational role in the evolution of Transaction-Based down payment assistance which now assists millions of Americans to achieve the dream of homeownership each year.