Sunday, September 18, 2011

HUD funds fix, sell W. Valley homes

Federal stimulus funding awarded to Maricopa County is helping identify and reward deserving workers and stable families with low-cost homes while at the same time assisting neighborhoods by improving the look of abandoned homes and getting them back on the market, officials say.

The county used the majority of the nearly $10 million it received from the U.S. Department of Housing and Urban Development to improve neighborhoods in the West Valley.

But the federal agency also doled out money to Arizona and several cities throughout the metro Phoenix area. In total, more than $121 million in HUD funding was granted in 2008, the first round of neighborhood-stabilization efforts.

Phoenix received the lion's share of money - $40 million - followed by Mesa at $9.7 million. Glendale, Chandler, Surprise and Avondale also used the funding to refurbish and resell homes.

Housing programs designed to turn foreclosures into affordable, refurbished homes for low- and moderate-income buyers are proving successful even as funding becomes scarcer, officials say.

Neighborhood-stabilization programs administered by the county and cities were instrumental in buying, repairing and reselling about 100 foreclosure homes in the southwest Valley.

About $9.9 million in federal stimulus funding was awarded to the county, with a majority of the funds benefiting the West Valley, one of the areas hit hardest by the real-estate meltdown.

Approximately $6.2 million paid for 43 homes that were rehabilitated and resold, or are under contract, according to the Housing Authority of Maricopa County.

Once neighborhood eyesores, nine homes in Buckeye, 10 in Goodyear and 24 in El Mirage were fixed up and resold to appreciative owners under the Homes to Owners program administered by the county. The homes have been rehabilitated with a focus on energy efficiency.

Approximately $1.7 million of the county's allocation from HUD was used by Exito Inc. to buy an additional 11 homes in Goodyear for seniors who live independently and need rental assistance. Catholic Charities Community Services received nearly $1 million for seven homes that will be used for the formerly homeless and for refugees who resettle in the United States.

"These neighborhoods have been devastated, especially in the West Valley," said Ursula Strephans, project manager for the county's neighborhood-stabilization effort. "It will be years before those 60,000 vacant and foreclosed homes will be occupied and the market corrected.

"In the meantime, this program has sought to identify and reward deserving workers and stable families, help to stabilize neighborhoods by improving the look of abandoned homes and getting them back into the market and into the hands of qualified homeowners."

In Avondale, which runs its own neighborhood-stabilization program, officials used $2.46 million in stimulus funds awarded in 2008 to turn around 46 homes.

That city's efforts focused on giving direct financial assistance to homebuyers, as opposed to the Homes to Owners program, where homes were bought and resold.

"The homebuyer was identified, they were qualified, they went out and found a home, and we helped them with down-payment assistance and rehabilitation after they closed on the house," said Sandy Lopez, who oversees the program. "We only did one home that we acquired and refurbished and resold."

Litchfield Park does not receive any of the county's funding, nor does it have its own program to rehabilitate foreclosure homes.

"A lot of programs we don't qualify for . . . just because of the income of the residents," City Manager Darryl Crossman said.

Although Tolleson falls under the county's program, Strephans said officials were not able to purchase any homes there because most of the ones in the city limits are too old to qualify for the program.

Using the income from resold homes, county officials were able to buy a downtown Phoenix apartment complex that was on the brink of foreclosure. It will now be used to house up to 300 low-income and formerly homeless residents.

The Homes to Owners grant was used not only for purchases and rehabilitation. About $200,500 was used in a partnership with Neighborhood Housing Services of Southwestern Maricopa County to subsidize closing costs for homeowners. Second mortgages placed on the homes are used to lower the principal loan.

In some cases repayment is not required if the owner remains in the home for a certain amount of time.

Federal guidelines say buyers cannot earn an income of more than 120 percent of the region's median income, which is based on household size. Buyers must have good credit and attend eight hours of housing counseling and education.

The program has its critics.

Andy Kunasek, chairman of the Maricopa County Board of Supervisors, said he is concerned that the program is being used to artificially improve the housing market, and he questioned whether government should interfere with home values.

"We're shoehorning people into mortgages with little or no down and giving them down-payment grants. . . . Anybody that bought that house with little or no equity 18 months or two years ago has got to be upside down," he said. "We should've stayed out of it. We just need to let the market find where it wants to be."

Kunasek said he has asked county administrators for information that will show if the value of homes in the program decreased since they were purchased and if the owners are still in the homes.

Since the initial push, follow-up funding has lessened, changing the focus of the programs.

Earlier this year, the county received more than $4 million in HUD funding. It received responses from three potential partners who want to buy and manage multifamily rental housing for those who earn 50 percent or less than the area's median income.

After the initial round, Avondale received an additional $1.2 million in funding. It plans again to assist homebuyers with down payments and repairs on homes in targeted neighborhoods. The goal, Lopez said, is to turn over about 35 homes using fewer funds.

"We're finding a lot of the homes that are out there now don't have as much damage as . . . a few years back so less will be spent on rehab and down-payment assistance," she said.

The county program gives taxpayers a return on investment, Strephans said.

"Obviously, there is more screening and scrutiny of potential homeowners in the Homes to Owners program than was done in the private retail market where there are no requirements for housing counseling/education," she said. "With public money, we have to be more prudent and careful, especially given recent history."

by John Yantis The Arizona Republic Sept. 17, 2011 12:00 AM

HUD funds fix, sell W. Valley homes

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