HUD foreclosure aid may yield windfall for major Md. localities
Wednesday, May 19, 2010
Montgomery, Prince George's and Baltimore counties may receive an additional $3 million to $6 million total this fall through a federal program that helps communities buy and redevelop foreclosed properties, according to estimates released Tuesday by the Department of Housing and Urban Development.
The program aims to stabilize neighborhoods plagued by foreclosures, after which properties tend to sell at fire sale prices and drag down surrounding property values. The Bush administration awarded $4 billion to various states when it launched the program in 2008.
Those states received a base allocation of $19.6 million each, without regard to varying degrees of need, HUD officials said. Additional funds went to localities that have been severely affected by the foreclosure crisis. The states and localities were given 18 months to dedicate the funds to specific HUD-approved projects.
On Tuesday, HUD Secretary Shaun Donovan told reporters that some jurisdictions did not need all the money directed to them. If those funds are not committed by the fall, they will be reallocated to other areas based on more recent information about foreclosure numbers and vacancy rates, he said.
"We will not know how much money will be recaptured because the deadline is not here yet," Donovan said. But he highlighted Prince George's as a likely candidate for reallocated funds.
A HUD spokesperson said Montgomery and Baltimore counties also are likely to benefit when the $3 million to $6 million is redirected.
The Washington region was awarded a total of $104 million through the program in 2008: $46.4 million to Maryland, $45.7 million to Virginia and $2.8 million to the District.
Prince George's was granted the biggest chunk: $10.9 million. Other big recipients in Maryland were Baltimore, with $4.1 million, and Baltimore County, with $2.6 million. In Virginia, Prince William County was eligible to tap into $4.1 million and Fairfax County, $2.8 million.
Maryland has used only 80 percent of the $26.7 million it was granted and is at risk of losing funds. But Rosa Cruz, a spokeswoman for the state Department of Housing and Community Development, said the state expects to commit all the money allotted to it by the Aug. 27 deadline.
States can use the funds to buy foreclosed homes at a discount and demolish or rehabilitate them, or they can help buyers with down payments and closing costs. They can create land banks to manage and sell the properties.
Donovan said that more than half the money allocated in 2008 has been committed to specific projects and that more than 17,000 homes have been built, renovated or demolished.
Last year, Congress approved an additional $2 billion for the program, and the District was awarded an extra $9.5 million.