Don Harris Responds to Greenspan with Lending Alternative; Launches New Down Payment Solution ITMO

SACRAMENTO, Calif.--(BUSINESS WIRE)--In response to former Federal Reserve Chairman Alan Greenspan’s call today for housing stabilization, AmeriDream president Ann Ashburn cited the need to resurrect down payment assistance programs eliminated by Congress October 1^st of this year. Don F. Harris, who created the original seller-funded down payment assistance model on which AmeriDream and others are based, disagrees.

“The Tribe is excited about bringing this product to the nation”

Harris, who revolutionized FHA mortgage financing and caused Realtor Magazine to recognize him as one of the “25 Most Influential People in Real Estate” in 2003, says don’t resurrect the old model, but instead use an alternative solution.

Known as ITMO, Indian Tribe Mortgage is a program offered by the Lower Brule Sioux Indian Tribe of central South Dakota. Unlike the banned seller-funded down payment assistance programs banned by the Housing Recovery Act earlier this month, ITMO is a second mortgage program offered by a government entity, a native American Indian Tribe, and complies with existing regulations.

“ITMO addresses the concerns that resulted in the elimination of seller-funded down payment programs, namely inflated sales prices and poor loan performance,” said ITMO founder Don F. Harris.

“I had hoped that a regulatory framework could have been enacted to preserve it. The elimination of seller-funded down payments necessitated a new solution, though. Simply stated, ITMO is that solution.”

“The Tribe is excited about bringing this product to the nation,” said Shawn LaRoche, a member of the Lower Brule Sioux Tribal Council. “This is an incredible economic development opportunity for the Tribe and a chance to redress historic inequities by creating an unprecedented partnership opportunity. We are grateful to be part of a critical mortgage solution during these challenging financial times.”

ITMO is the bridge between down payment and closing for some homebuyers. The assistance program provides a silent second loan that requires no monthly or amortized payments. The principal amount, plus interest accruing at an annual rate of 3%, becomes due upon sale, refinance or transfer. The loan is forgiven if none of these events occur within the first seven years of ownership. In addition, if 50% of the ITMO loan is repaid within 18 months from the purchase date, then the remaining 50% of the ITMO loan is forgiven.

“ITMO is the financing tool that enables the borrowers, realtors, mortgage brokers, lenders and secondary investors to bridge the gap, solidify transactions, and support the delivery long term performance,” said Sue Frost, President of Alliance Mortgage and Marketing in Sacramento, California, who has already processed a number of ITMO loan applications. “ITMO pinpoints what is needed at all levels of the playing field during this time in our US and world economy,” she said.

The market has adjusted such that those who cannot afford rent can afford a mortgage, but have traditionally had difficulty getting over the hurdle of that initial down payment. “There are a lot of loan programs out there to help with that down payment, but the buyer typically must fit within specific qualifiers,” said Jon Nastro, a Broker Associate with Keller Williams Realty. “Often times it’s a difficult match. ITMO doesn’t have these limitations. It reaches low-to-moderate income buyers and, unlike many loan-assistance programs, applicants do not need to be first-time buyers. That’s really where ITMO comes into play.”

To learn more about ITMO please visit www.itmo.com.