HUD Sets Aside $95 Million To Ease Foreclosures in Area
Saturday, September 27, 2008
The Washington region should receive nearly $95 million of the $4 billion that the federal government has set aside to help communities buy and redevelop foreclosure properties that have dragged down home prices around the nation.
Yesterday, the Department of Housing and Urban Development directed $46.4 million to Maryland, $45.7 million to Virginia and $2.8 million to the District of Columbia.
The community block grants were approved as part of a broader housing rescue package this summer. But the money was not divvied up among states until now.
HUD's announcement was eclipsed by activities on Capitol Hill, where policymakers worked feverishly on a plan to bail out Wall Street. But the HUD money is meant to ease the housing crisis that led to the bailout by stabilizing foreclosure-plagued neighborhoods.
HUD singled out the hardest-hit communities to receive a specific share of the dollars set aside for their respective states.
In this region, Prince George's County is eligible for the biggest chunk: $10.9 million. Trailing in Maryland are Baltimore City with $4.1 million and Baltimore County with $2.6 million. In Virginia, Prince William County can tap into $4.1 million and Fairfax County into another $2.8 million, according to HUD.
But to get the money, states and communities have to act fast. By law, the funds must be committed within 18 months. It is up to each community to come up with a plan.
If the plan meets HUD's requirements, states could receive their money within days, HUD Secretary Steve Preston told reporters yesterday. "It is our intention to push hard to get this money into the hands of these communities."
Preston said HUD decided how much each state should get by examining foreclosure numbers, penetration of subprime loans, mortgage default rates, vacancy rates and economic data in each area.
Once the states receive their money, they can use it to buy foreclosed-on homes at a discount, demolish and rehabilitate them, or help buyers with down payments and closing costs. They can even create land banks to assemble and temporarily manage and sell the properties, Preston said.
Barry Merchant, senior policy analyst at the Virginia Housing Development Authority, said that some state officials from around the country raised concerns about whether they were getting their fair share of funds during a conference call with HUD officials, who then detailed how they had reached their decisions.
Merchant said Virginia's allotment is about what was expected.
"In terms of whether it's a lot of money, not really, when you consider the magnitude of the problem," Merchant said. "But at least it provides some resources in the areas hardest-hit."
In early October, HUD will host summits to explain technical details about its requirements.
Maryland should have its plan ready for HUD Dec. 1, said Clarence Snuggs, deputy secretary of the Maryland Department of Housing and Community Development. The state is working with counties and smaller jurisdictions, such as Hagerstown, to come up with a strategy, he said.
"One of the things we hope to get out of this is to get people to buy vacant properties and put them in the hands of homeowners," Snuggs said.