Uncle Sam to send millions to fix foreclosed homes

By Andrew Edwards and Josh Dulaney
Staff Writers
The federal government has pledged to send millions to the Inland Empire in hopes of preventing recently foreclosed properties from becoming festering spots of urban blight.

In all, the Housing and Urban Development Department will spend $3.92 billion on its Neighborhood Stabilization Program, which was authorized by legislation passed earlier this year.

The program would send nearly $125 million to San Bernardino and Riverside county governments. The money would allow redevelopment officials to purchase foreclosed homes in order for the properties to be refurbished and resold.

The dollars could also be used to demolish and redevelop blighted dwellings. Local governments would be required to make rehabilitated properties available to low- and moderate-income residents.

Local officials said Monday that they are still figuring out how to use the federal money.
"We'll be doing a comprehensive program to get the best bang for our buck," said Fontana Councilman Frank Scialdone. "But we haven't really strategized or developed a program yet."

Scialdone said he supports the city using the grant to buy homes and help low-income and first-time homebuyers move in.

Fontana was allocated $5.9 million through the Neighborhood Stabilization program.
In San Bernardino, set to take in $8.4 million, Carey Jenkins of the San Bernardino Economic Development Agency, said officials need to gather information that will guide such decisions as whether to target particular neighborhoods or finance redevelopment efforts that would be scattered throughout the city.

Another consideration is whether San Bernardino officials could stretch their dollars by partnering with another government agency, since $8.4 million can only buy so many homes, even in a deflated market.

"Bottom line, what we're trying to do is acquire the single-family properties at as deep a discount as we can negotiate," Jenkins said.

The median price of a San Bernardino home in August was $133,000, according to DataQuick Information Systems.

Jenkins said that at most, San Bernardino officials could buy 100 homes. That's less than 10 percent of the 1,758 homes he said were foreclosed upon between August 2007 and August of this year.

Although Jenkins didn't mention any specific San Bernardino neighborhoods where he thinks the new money could be best spent, he suggested that the funds be spent in places that are mostly populated by home owners.

County government is also on line for nearly $23 million in stabilization funds.
David Zook, spokesman for 1st District Supervisor Brad Mitzelfelt, said his boss represents the area of the county that has been hit hardest by foreclosures.

The vast 1st District includes most of the county's Mojave Desert communities. Many of the new homes that sprouted in the Victor Valley area over recent years have now been pummeled by the foreclosure wave.

"I know it is more serious in the High Desert than in other areas, simply because of the rapid growth that occurred there," Zook said.

Zook said county officials have until Dec. 1 to plan how to use the new influx of federal money. He also said that county economic development officials have told him that as many as 18,000 more foreclosures are expected to happen in the next six months.

The north Fontana neighborhood known as Sierra Lakes -- dotted with vacant homes -- has become something of a symbol of the Inland Empire's foreclosure problem.
Some residents welcomed the idea of local officials reselling homes to low- and moderate-income people, but with caveats.

Terry Alderete and his wife Chanin bought a home in Sierra Lakes in 2003, with a 20 percent down payment and a fixed rate mortgage.

Alderete said as long as the low-income and first-time homebuyers qualify and have good credit, it's a good thing.

"I don't think you should give anything away," Alderete said. "Do it for someone who qualifies, and they shouldn't be able to sell tomorrow at today's price."

The Alderetes bought their home for $240,000 and watched it appreciate to about $660,000. Alderete estimates it's worth about $340,000 today.

But Alderete, who moved from Ventura, said he plans to die in the home; it's a place to live, not a property to flip for profit, as so many former neighbors once viewed their now foreclosed homes, he said.

The federal law that authorized the Neighborhood Stabilization Program requires 25 percent of program money to be used to house people who earn less than 50 percent of their area's median income.

The remaining 75 percent of Neighborhood Stabilization dollars could be used to supply housing to people who make as much as 120 percent of their area's median income.
Another Sierra Lakes resident, a homeowner for about eight years, said he would support such a program, because new homeowners typically take care of their properties better than those who rent.

"Even though he's low income, he would have a sense that, 'this is mine,' and therefore, he might spend some money in maintaining the home, the grounds, the interior and exterior," said Richard Sandoval.

Fontana Councilwoman Janice Rutherford said the city shouldn't focus on one area of blight.

"My preference is we help as many communities as possible," Rutherford said.

She said the city should be able to do with foreclosed single-family homes what it does with apartment complexes - buy them, fix them and ensure that they become safe dwellings for responsible residents.

"It's not a problem unique to any one area, and that's certainly how we're going to have to approach it," Rutherford said.