More Issues with Foreclosure Relief Program

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Los Angeles County has, by far and away, had more success than any other Southern California government when it comes to using a federal program to get low- and- moderate-income families in previously foreclosed homes.

Yet the state is now threatening to take away money allocated to LA County because its not being spent fast enough, money that the state was slow in getting to the county in the first place.

My story last month detailed the many issues with how the federal program, called the Neighborhood Stabilization Program, is being administered at the local level.

Millions, for example, have flowed into Santa Ana and other Orange County governments, but they have only put families in a handful of formerly foreclosed homes. LA County, on the other hand, was able to save 50 homes.

Yet, the U.S. Housing and Urban Development saw fit to award Santa Ana — which had salvaged a total of eight homes as of last month — another $10 million under a second round of the program. LA County, on the other hand, was rejected.

And now LA County might lose federal money that is controlled by the state because it hasn’t obligated the money fast enough. But the main reason why the county has been slow in getting the money spent is because the state lagged in getting the money to the county in the first place, said Lois Starr, Director of the Housing Development and Preservation Division of the Community Development Commission of the County of Los Angeles.

The state sent LA County an email saying it would grant an extension — only if LA County accepted technical assistance.

LA County was supposed to get the money from the state in October, but the state waffled on the grant until February because, according to Starr, LA County’s program was different from other grantees. One reason LA County has been successful is because it decided not to go with a HUD recommendation to use an intermediary to buy and rehab the foreclosed homes.

“For whatever reason they didn’t understand or consider our program to be within their guidelines,” Starr said.

The timeline called for 75% of the money to be obligated by March — just one month after LA County finally received the money. The threat and accompanying offer of assistance hasn’t discouraged the program’s top performing grantee. Starr said as long as LA County can keep going, that’s all that matters.

“Of course we said yes to the assistance,” Starr said.



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