Neighborhood Housing Services of America is Closing Shop

Due to the recent housing downturn and a lack of funding, the board of director of Oakland, California-based[IMAGE]

""Neighborhood Housing Services of America"":http://www.nhsaonline.org/ (NHSA), a nonprofit secondary market for home loans to low- and moderate-income homebuyers, has authorized the ""orderly wind down"" of its affordable housing programs.

According to NHSA, the financial demands of the current market and expected continuing challenges have contributed to the organization's inability to secure its annual grant from ""NeighborWorks America."":http://www.nw.org/network/home.asp And the lack of grant funding has left the nonprofit organization with liquidity levels that will not allow it to continue operations.

During the past year, NHSA implemented a comprehensive restructuring plan, including the hiring of restructuring specialists, a significant reduction in operating expenses, the cessation of funding of its technology initiatives, and changes in management and board governance. During this period, NHSA said it successfully negotiated concessions in loan terms and interest rates from its lenders/investors, in anticipation of obtaining the grant funding necessary to support the

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continued purchase of loans for low- and moderate-income homeowners from the NeighborWorks Organizations.

But without this funding, NHSA is being forced to close down operations over the next several months. The organization said every effort will be made during this period to protect the interests of its lenders, other creditors, customers, employees, and other stakeholders in the community lending field.

As part of this discontinuation of operations, NHSA will no longer purchase new loans, but it will continue to collect payments and service existing mortgage loans until arrangements can be made to transfer these responsibilities to other parties. NHSA said will seek to minimize losses and maximize recoveries on behalf of its creditors, and it will continue to enforce contractual arrangements with all parties involved.

Bruce Gottschall, chairman of the board of directors, said NHSA has been a strong supporter of the community development field for 35 years, arranging responsible mortgage financing for thousands of homeowners who otherwise would have been unable to own or rehabilitate their homes, or would have paid higher, unaffordable interest rates.

Gottschall said the organization's unique programs have also helped many current homeowners avoid foreclosure during these difficult economic times. In addition, he said NHSA has served its investors by maintaining delinquencies and credit losses on its mortgage loans at levels well below national averages for similar borrowers.

""NHSA is proud of its success in meeting the needs of so many low- and moderate-income and minority citizens,"" Gottschall said. ""It is unfortunate that circumstances require the ending of this exemplary contribution to the nation's housing needs.""