UPDATE 1-Activists urge US stop FHA curb on downpayment aid

(Adds comment from Sen. Dodd's spokeswoman, paragraphs 5-7)

By Joanne Morrison

WASHINGTON, Nov 15 (Reuters) - Community activists on Thursday called on Senate Democrats to help stop the U.S. government from banning certain mortgage down payment assistance programs designed to put low income and minority families into home ownership.

The ban, set out by the Department of Housing and Urban Development, has drawn tough criticism and legal action from the groups that provide this mortgage assistance to low-income home buyers. Lawmakers in the House, opposed to this ban, have introduced measures to keep this homeowner assistance in place but there has been no specific action so far in the Senate.

"If there are concerns by HUD that there is need to change the program, then we should mend it not end it," said the Rev. Al Sharpton at a joint briefing here with Nehemiah Corp., one of the key organizations specializing in this assistance.

"Thousands upon thousands of people have used this program and have achieved home ownership," said Sharpton whose organization, the National Action Network, sent a letter to Senate Banking Committee Chairman Chris Dodd, a Democrat from Connecticut, asking him to help keep this mortgage assistance in place.

A spokeswoman for Dodd said legislation that cleared his committee and awaits full approval in the Senate would expand access to FHA loans.

"Senator Dodd has a thirty-year record fighting for equal opportunity for all Americans. This bill can help hundreds of thousands of homeowners escape predatory home loans and instead find affordable, quality loans that allow them to buy a home and build long-term financial security," Dodd's spokeswoman said.

Efforts to quickly consider that measure in the Senate on Thursday, however, were quickly abandoned as the measure is opposed by key Republicans.