The Santorum-endorsed Nehemiah Project and its nearest competitor, AmeriDream, according to Horwitz and Jamieson, helped set up 392,000 mortgages worth $54 billion, earning tens of millions in fees for itself—and nearly a billion dollars each for Centex, D.R. Horton, and Dominion Homes.
One of the consistent refrains from the Rick Santorum campaign is that he opposes government bailouts, but as a senator, he supported the something-for-nothing policy most responsible for the housing bubble. Like George W. Bush and other “compassionate conservatives,” he was naively obsessed with affordable housing for low-income potential home buyers, a mismanaged cause that led to billions in loan defaults and which the IRS called a “scam.”
In his book It Takes A Family (2005), Santorum wrote at length and approvingly of the Nehemiah Project, a Sacramento faith-based nonprofit that helped mostly black low-income buyers get access to home ownership through its down-payment assistance program. (The name Nehemiah, who rebuilt Jerusalem, comes from the Bible.)
But as Jeff Horwitz and Dave Jamieson report from the Huffington Post’s Investigative Fund, down-payment aid programs like Nehemiah effectively “pav[ed] the way for even riskier subprime loans by private lenders.” How did this happen? Horwitz and Jamieson explained in 2009.
A home builder would agree to make a “gift” to the nonprofit in an amount equal to the down payment. The nonprofit would give the cash to the buyer, often earning a generous fee for its role as middleman. In less than a decade, nonprofits had arranged more than a million no-money-down house sales around the country. By 2008, they represented more than a third of all loans backed by the Federal Housing Administration (FHA).
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