State to get federal foreclosure relief

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Times Staff Writer

California and many of its communities hardest hit by the foreclosure crisis stand to receive more than $500 million in federal aid over the next 18 months to buy and fix up distressed homes, the Department of Housing and Urban Development announced Friday.

Within hours of the announcement, California’s two Democratic U.S. senators, Dianne Feinstein and Barbara Boxer, protested that the state was not getting its fair share of the nearly $4 billion Congress allocated to help local governments deal with blight from foreclosures.

“Frankly, it is beyond us how California -- which has nearly twice the amount of foreclosure filings than Florida (561,223 compared with 287,210) -- could receive less assistance. This makes no sense, and is totally unacceptable,” the senators wrote in a letter to HUD Secretary Steve Preston. (Florida received $541 million; California $521 million.)


HUD officials said they believe their formula fairly distributes money to the places that need it most. They also said the senators were using different, less complete data than HUD relied on; HUD data show that Florida has a higher foreclosure rate and a higher risk for abandoned homes than California.

The city of Los Angeles is to receive about $33 million directly from the federal government. In the next few months, the city could also get money from the state, which has a pool of $145 million to allocate to communities. With more than 13,000 foreclosed homes in the city, Los Angeles Councilman Ed Reyes warned that the federal funds would go quickly. Los Angeles County is to receive $17 million, and other cities in the county, such as Long Beach and Lancaster, also would get awards.

The largest single award, about $50 million, would go to Riverside County, where the foreclosure crisis is so dire that bobcats recently took up residence in an empty home.

HUD’s neighborhood stabilization program, which was championed by U.S. Rep. Maxine Waters (D-Los Angeles), is part of a housing bill approved in July. It gives money directly to local governments to buy and fix up foreclosed homes.

Critics of the program say it could hurt recovery, explaining that governments will now be competing with lenders and private homeowners who have been struggling to sell in a depressed market.

Last month, The Times contacted housing officials in the 12 California counties with the highest concentrations of foreclosed properties. Most said they had not lobbied for the bill, and several wondered whether they had the staff to make use of the funding.


Under the program, governments can demolish or rehabilitate blighted homes, then either resell them or use them for affordable housing.