Despite Streamlining Efforts, Quake Loans Lag : Recovery: Los Angeles has granted interest-free funds for only 18% of units. Number of workers on program will double.

Despite efforts to speed up the process, Los Angeles city officials who manage a loan program for quake-damaged homes and apartments have approved funding for only 18% of the housing units in the program.

The city’s zero-interest loan program has provided $52.5 million to repair 2,851 quake-damaged housing units, according to a city report. But as of Thursday, applications for another 12,700 units had yet to be approved and city officials expect applications for many more units in the coming months.

“Everybody thinks it’s moving too slow,” said City Councilwoman Jackie Goldberg, who represents hard-hit areas of Hollywood and Silver Lake.

Housing officials say the backlog is due to delays on the part of the applicants, who can get loans only after negotiating a repayment schedule with their mortgage lenders and then hiring contractors to prepare detailed repair plans.

“We are waiting on them, they are not waiting on us,” said Gary Squier, head of the city’s Housing Department, which manages the $314-million program.

Nonetheless, the city plans to double the number of workers assigned to oversee the loan process, said Squier. The City Council has approved funding to add 50 workers to the 55 workers already assigned exclusively to the loan program, he said.

In October, the Housing Department streamlined its loan approval process to reduce 90% of the paperwork needed to get loans approved by the City Council. The council must approve all loans over $525,000. The department can approve smaller loans administratively.

Although the streamlining process has been in operation for three months, the City Council belatedly endorsed the process Tuesday.

The unique loan program was designed to help rebuild the more than 65,000 housing units severely damaged by the Northridge quake.

Under the loan program, property owners who have been rejected by the Small Business Administration and traditional lending institutions can get a 30-year, zero-interest loan. The first payment is not due for five years. The loans are funded with state and federal grants.

As of Dec. 29, the city Housing Department had received loan applications to repair 15,554 housing units and had processed loans for 2,851 units, according to the city report.

Because 25,108 housing units in Los Angeles have been rejected for funding by state and federal aid programs, housing officials expect to see applications for another 10,000 or so units in the next few months.

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Robert Moncrief, who oversees major projects for the Housing Department, said there are several reasons for the backlog, most of which have to do with the applicant’s meeting a series of requirements to qualify for a loan.

In addition to negotiating new terms for mortgage payments, an applicant has to get a contractor to document all the repair work needed in the building, he said.

Because most contractors are overbooked with quake-repair jobs, Moncrief said it may be difficult to meet such a requirement.

“We are working as fast as the property owner can get motivated,” he said.

Squier predicted that banks will complete foreclosure proceedings on more apartment buildings in the next few months, making the units available for new owners who will most likely take advantage of the city loan program to make repairs.

He said he hopes the added staff and other changes will help the department meet its goal of funding repairs for 5,000 housing units by Jan. 17--the quake’s first anniversary.

In a related matter, several council members questioned the Housing Department’s strategy of providing loans on a “first-come-first-served” basis.

Goldberg said she fears that the loan program will run out of funding before the owners of some low-income housing units get around to applying for loans. She said she worries that the much-needed affordable housing will not be rebuilt.

She said she will talk with housing officials about setting aside a portion of the funding for low-income units.