City Loan Program for Quake Victims Runs Out of Money : Aid: Fund for single-family houses and apartment buildings has had to put thousands of applications on hold.

A Los Angeles city loan program for victims of the Northridge quake has run out of money, forcing the city to put thousands of loan applications on hold, officials said Monday.

The program affects owners of single-family houses and apartment buildings not located in “ghost town” or low-income areas.

“It’s virtually all gone,” said Gary Squier, general manager of the city’s Housing Department.

Because of the shortfall, loan applications for approximately 2,000 homes and apartments are unfunded and on hold, according to a Housing Department report.

Squier attributed the funding shortage to the popularity of the program and a substantial surge in loan applications in the past two months.

The program provides zero-interest loans with payments deferred for up to three years. Houses and apartments must have suffered at least $7,500 per unit in quake damage. Owners must show that they have no other source of funding. The program also provided loans to those who want to buy and repair damaged units.

Still, the program may be revived.

The Housing Department has drafted a proposal to the City Council, requesting permission to seek between $55 million and $71 million from the federal Department of Housing and Urban Development to continue the program. The HUD loan would be repaid with payments made by property owners who received earlier loans from the city.

The proposal also asks the council to divert some money to the loan program from a $99-million earthquake account that is being used for various business and community programs throughout the city.

The request is expected to come before a council committee on housing next month.

However, Squier said he is concerned that the delay in providing funding to make repairs may severely affect some quake victims who have been living with damage for nearly two years.

“We clearly don’t want a break in the flow of funds to the projects,” he said.

Councilman Hal Bernson, who represents hard-hit portions of the northwest San Fernando Valley and who heads the council’s Ad Hoc Earthquake Recovery Committee, was out of town Monday and unavailable to comment.

But his assistant chief deputy, Francine Oschin, said Bernson will make every effort to keep the loan program going.

“We are going to leave no stone unturned looking for more funding,” she said. “It’s unfortunate that the money we had did not meet the needs.”

The shortage did not come as a complete surprise to housing officials, who warned the council last year that a housing loan program funded with $321 million in federal grants would be insufficient.

In response to the warning, the council instructed the Housing Department to set aside repair money for quake-damaged condominiums, which have posed difficult problems because they diminish the value of undamaged units in complexes.

The department was also instructed to set aside money for “special needs areas,” which were defined as neighborhoods with the greatest combined concentration of damaged units and low-income population.

Finally, the department was told to set aside money for the 17 “ghost town” clusters, quake-damaged buildings that have been overrun by drug dealers, prostitutes and vermin. Last week, the Housing Department announced that the owners of 99% of the vacant buildings in the ghost towns have obtained financing for repairs, either through the city loan program or private funding.

Squier said about $20 million remains uncommitted for condominium loans and another $20 million remains for the special needs areas. But no money remains for single-family homes and apartment buildings outside of the ghost towns, he said.