States Will Soon Receive Foreclosure Fix Funds
By: Gerri L. Elder
Soon the federal government will begin distributing nearly $4 billion to states and cities across the country to rehab foreclosed homes.
Those opposed to the measure say that the money that will be given to states and cities is not nearly enough to make a difference in the sea of foreclosed homes that have been forcibly abandoned.
In September, the U.S. Department of Housing and Urban Development decided how to distribute $3.92 billion to areas hardest hit by foreclosure. The money will be handed over to the states and cities within the month. A HUD spokesman said that the level of funding for each area was determined by the number of foreclosures, number of subprime mortgages, and the number of mortgage defaults and delinquencies in the state.
Officials in areas that receive the grants will then have 18 months to decide how to best use the money to purchase and renovate foreclosed properties into affordable housing for sale or rent. The money may also be used to demolish homes that are too far gone so that the land can be redeveloped.
All of the foreclosed properties must be bought at a discount from the current appraised value so that the money is not used to bail out lenders.
After the foreclosed properties are all fixed up, they must be sold or rented to families at or below 120% of the area's median income. A quarter of the funds are to be set aside for families at or below 50% of the median income.
According to the Daily Herald, the federal government has offered Utah nearly $20 million to buy and renovate foreclosed homes. Utah is ranked 10th in the nation for foreclosure filings. During June, foreclosures in the Provo-Orem area soared 810 percent from a year earlier. At the same time statewide, Utah's rate of new foreclosures year to year was more than three times the national average.
Approximately $121 million in federal funds to purchase and rehab foreclosed properties will end up in Arizona. The Arizona Republic reported that the Arizona Department of Housing will receive $38 million, Phoenix will receive $40 million, and the remaining $43 million will go to other areas of the state that have been ravaged by foreclosure.
Almost $541 million in federal funding will be sent to Florida, making it the state receiving the most money for the foreclosure fix-up. California will receive $530 million and Michigan will receive $264 million.
Nevada, which has the highest foreclosure rate in the nation, will receive just $72 million to purchase and renovate foreclosed homes.
Every state is to receive a minimum of $19.6 million as part of the federal foreclosure fix.