Posts (RSS)Federal Grant to Buy Homes on Foreclosure Listing
Both Pasco County and Pinellas County in Florida have jointly applied for a total of $50 million federal grant for the second round of the Neighborhood Stabilization Program. Pasco originally plans to use the federal money to buy and rehabilitate properties on foreclosure listing.
In the first round of the federal funding program, Pasco applied and received a total of $19.5 million which it had difficulty in using to purchase properties on repo foreclosure listing. However, this did not stop the county from taking another shot for the federal funding under the Neighborhood Stabilization Program 2.
The federal funding is based on an area’s vacancies, foreclosures and subprime loans. The number of foreclosed homes in Pasco is increasing faster than how the community development office spends the money.
Community development director George Romagnoli said that the county had spent almost $1.5 million, which is more than the amount spent by any local government in Florida. He said that the county has 10 nonprofit organizations that are purchasing properties on foreclosure listing.
He added that except for three, the rest of the counties in Florida are qualified for the federal funding, with Pinellas posting nearly 50 percent in foreclosure rate increase.
Pasco had difficulty in how to spend the first round of federal funding it received. Last October, county commissioners revised their spending plan by allocating about $6.5 million for homebuyer assistance, an increase from the original proposal of $4 million.
Under the original proposal, the county would spend the funding to purchase and rehabilitate foreclosure homes and then sell them. Commissioner Michael Cox decided to restructure the spending plan, giving emphasis on providing down payment assistance.
In restructuring the plan, Cox explained that the original amount of $16 million intended for purchasing and renovating distressed properties could grow to $436 million if it will be used to help potential buyers acquire properties.
However, Romagnoli noted that the effort of the local government to direct the funding to down payment assistance had been unsuccessful because banks refused to approve loans to at-risk borrowers eligible for the county’s grant.
A review of the program is in the offing but for the meantime, Romagnoli wants a portion of the funds to be allocated to purchase foreclosure houses. So far, Pasco County and its partners have purchased nearly 35 properties on foreclosure listing.