DADE CITY - Pasco County and federal authorities might be in a tug of war over how best to spend nearly $20 million of federal aid in a foreclosure rescue plan.
Two weeks ago, the County Commission approved a tentative plan to divert most of the funds into down payment assistance to help people directly buy foreclosed or abandoned homes.
Officials at the U.S. Department of Housing and Urban Development, however, have indicated they might reject the county's plan, Pasco Community Development Director George Romagnoli told commissioners today.
Romagnoli is leading efforts to finish the county proposal, which must be submitted to HUD by Dec. 1. If the Pasco plan is rejected, the county would have to reapply for the federal aid and might miss out on getting any money.
"We received some – I wouldn't say angry, but some critical – e-mails and discussion on our original proposal," Romagnoli said, referring to correspondence from HUD officials.
HUD and the Federal Housing Administration want foreclosed or abandoned houses brought up to current codes with the federal aid before the houses are put up for sale. Romagnoli said rehabilitation repairs might cost anywhere from $15,000 to $35,000 per house. Then down payment assistance could be used for people buying the renovated houses.
Other federal funds would help nonprofit agencies create permanent housing, such as Catholic Charities' Bethany Apartments, in Dade City.
A revised plan Romagnoli presented Tuesday would set aside $6.5 million for down payment assistance.
Remodeling foreclosed-on houses might make sense in an ordinary market, Greg Armstrong, president of West Pasco Board of Realtors, testified before commissioners. People can recoup their investments in repairs, he said.
With a glut of 5,700 Pasco County houses for sale west of the Suncoast Parkway, however, any foreclosed dwelling, even with remodeling, probably would not fetch a higher price in this depressed market, Armstrong insisted.
Armstrong believes applying at least $10 million of the federal aid toward down payment assistance would be the fastest way for the county to help the Pasco real estate market recover.
Armstrong would prefer to place buyers into foreclosed houses first. The new owner could then do repairs, perhaps with some financial assistance, he said.
Many of the foreclosed houses are already in good shape, he added.
The FHA would have to waive its requirements for repairs to be done before financing loans, Armstrong said. The federal agency would have to allow repairs to come after a buyer is in the house.
The National Association of Realtors will lobby for such changes at an annual meeting this weekend, Armstrong said.
Some local community banks and other lenders appear to be interested in offering conventional home loans as an option to FHA financing, Armstrong and Commissioner Michael Cox said.
Some of the houses that have been foreclosed on might have been built before the county even had building codes, Cox commented. The commissioner agreed it might not make a lot of sense to spend $30,000 on renovating a house with a $60,000 market value.
"That tends not to make sense, but we are talking about programs from the federal government," Cox said with a chuckle. Cox originally thought federal authorities would give the county a lot of latitude on how to spend the federal aid, but that doesn't appear to be the case.
"We have the chance to reach hundreds and hundreds of people and put the money where it can do the most good" in a depressed market through down payment assistance, Armstrong maintained.
"I must sadly report," Armstrong said, that in the past two weeks alone 212 houses have been sold on courthouse steps for back taxes.
"These are staggering numbers and we must take decisive action and quickly to stop this flow," Armstrong urged commissioners.
http://www.foreclosuresexpo.com
| Joshernaut 07-28-2009 |
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