Inland Counties to Outline Plans for Federal Funds to Battle Foreclosed Home Blight

Friday, November 21, 2008
Duane W. Gang
The Press-Enterprise

Riverside and San Bernardino counties have outlined how to spend nearly $70 million in federal funds to help fight blight stemming from the region's home foreclosure crisis.

But officials in the two counties have taken different approaches in how they plan on using the new money in hard-hit communities.

Riverside County will spend nearly half of its $49 million total directly buying up foreclosed homes and reselling them to low- and moderate-income residents.

Meanwhile, San Bernardino County will use the largest share of its $22.8 million to provide subsidized second mortgages to low- and moderate-income residents buying foreclosed homes.

Along with first mortgages, the so-called soft seconds help make a home more affordable, according to county documents.

The funding comes from the federal Housing and Economic Recovery Act approved by Congress and signed by President George W. Bush in late July.

State and local governments are set to receive a combined $4 billion, of which $133.5 million is slated for the Inland region.

Local governments have until Dec. 1 to submit a plan on how to spend the money to the federal Department of Housing and Urban Development.

San Bernardino County supervisors approved their plan this week, while their counterparts in Riverside County will take up the final plan on Tuesday.

In Riverside County, officials will target the money in communities with high rates of foreclosure, large numbers of subprime loans, sinking home values and rising unemployment, according to the county's proposed plan.

The most at-risk areas, based on a HUD formula, include Home Gardens, Sky Valley, Banning, Desert Hot Springs and the county's mountain communities.

"We are going to give priority to the areas that have the greatest need," said Tom Freeman, a spokesman for the county Economic Development Agency.

In addition to buying up foreclosed homes, fixing them and selling them, Riverside County will use $1.86 million to purchase foreclosed homes to rent. Another $9.7 million will go to boost a first-time homebuyer program and $12.2 million will go toward buying foreclosed multi-family properties.

On the surface, Freeman said $48.5 million seems like a lot. But given the scope of the problem, with more than 30,000 foreclosed properties, it will go only so far, Freeman said.

"It falls well short of the mark to make a major impact," he said.

Outside of subsidized second mortgages, San Bernardino County plans to use $2.5 million to provide down-payment assistance to new homebuyers. The county will use $2 million to partner with nonprofit and for-profit companies to buy foreclosed homes and sell them to residents with a household income of less than $74,000.

Another $4 million will go toward partnering with the county's housing authority or other partners to buy up foreclosed or abandoned rental properties.

The most at-risk communities the county will target include cities such as Adelanto, Barstow, Colton, Yucca Valley and Twenty-nine Palms and unincorporated areas in Fontana and San Bernardino.

"The board has been at the forefront of this housing recovery effort since Congress approved the legislation in July because we know swift action is necessary to stabilize our housing market and to protect neighborhoods from the damaging impacts of multiple home foreclosures," Board of Supervisors Chairman Paul Bane said in a statement.

The plan covers nearly half of the county's cities and communities. Other incorporated cities, such as Fontana and San Bernardino, receive their own funds through the housing recovery act.

Those cities also must submit a plan to HUD by Dec. 1.

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