HUD Announces Additional Funds To Fight Foreclosures
Areas hardest hit by the nation's housing crisis may receive up to $1 billion in unused federal funds, according to Housing and Urban Development Secretary Shaun Donovan.
The announcement comes at a time when the Treasury's anti-foreclosure program, HAMP, is failing. A report released Monday shows more than twice as many homeowners were kicked out of the administration's Home Affordable Modification Program last month as were granted relief.
Donovan made the announcement to reporters at a media breakfast hosted by the Christian Science Monitor on Tuesday, indicating that funds were originally part of the Neighborhood Stabilization Program and "were spread quite broadly across the country."
HUD estimates more than 63,000 homes will be demolished or fixed up. The program has already awarded nearly $6 billion in grants to help state and local governments respond to rising foreclosures, and it has contributed to the renovation of 17,000 homes so far.
Most of the money will go to benefit states such as Nevada, California, Florida and Arizona, which have been most affected by the housing crisis, providing them with funding to purchase and rehabilitate vacant homes.
The reallocated money could help Las Vegas more than any other single city, Donovan noted.
But there's evidence that the country has too many houses on the market already, the fallout of over-zealous construction during the boom years. In Las Vegas, for instance, there are 9,517 new homes sitting empty and in the first quarter alone 5,600 homes were repossessed by lenders, according to recent reporting in the New York Times. Donovan responded to this directly: "We have seen substantial improvements in many badly depressed markets... I wouldn't say Las Vegas is a good example of what's happening around the country."
Renovating and reselling houses is only a fraction of what officials aim to do with the incoming money. The administration will work with Congress on HUD's Neighborhood Stabilization Program, with additional dollars for foreclosure prevention counseling. In places like Cleveland and Detroit, Donovan is planning what he called a fundamental rethinking of land use.
"What was encouraging [in Detroit]," says Donovan, reflecting on his trip to the city last month, "was that Mayor Bing is thinking strategically." Outside-the-box initiatives include a commitment to building better public transportation, in particular a new streetcar line and maybe a commitment to rural farming.
Detroit is a so-called "winner" in HUD's formula used to determine which areas are most in need of public funds. By that measure, Las Vegas is a winner too, but it's unclear how much they'll benefit. "Las Vegas is pretty clearly not a good example of what our program is trying to do," said Donovan.