Friday, Oct. 10, 2008

Money for Merced County not forthcoming

Congressman cannot get phone calls returned

Still shocked that Merced didn’t receive any federal foreclosure aid, Rep. Dennis Cardoza demanded that the federal housing agency hold off on distributing the $3.9 billion until it revises its calculations.

Cardoza, D-Merced, sent a second, more critical letter to Steve Preston, secretary of the U.S. Department of Housing and Urban Development, on Tuesday to point out how the agency “bungled” its formula.

“Failing to correct these fundamental flaws to the methodology of allocation will only perpetuate the utter devastation of Merced wrought by the foreclosure crisis,” the congressman wrote.

Cardoza asked that the agency hold off on sending out the checks until it fixes what he sees as the errors that left Merced and other communities off the list.

The money can be used by cities and counties to buy foreclosed homes, clean them up and sell them to low-income residents. As a result, neighborhoods won’t become blighted, and the surplus of homes will decrease.

For the first five years, any money made by the home’s sale must be reinvested into buying more foreclosed properties. After that, the money goes back to the federal government.

HUD, standing by its formula and decision, plans to hold a meeting today with California representatives to elaborate on how it decided where to distribute the money from the Housing and Economic Recovery Act. Cardoza said the agency hasn’t returned his phone calls, and he still wants a written response. He’s begun hearing conflicting accounts of why Merced didn’t get help. “I think they’re hunkering down on this,” he said Wednesday. “They seem unwilling to correct their deficiencies.”

Two weeks ago, the agency released its list of which cities and counties would get the money, setting off an intense lobbying effort by local and federal leaders to increase California’s share and put Merced on the list. Other members of Congress believe the agency shortchanged California by giving it $529 million overall, $12 million less than what Florida collected.

Cardoza and local leaders are still reeling from the news that the city will be forced to get its foreclosure aid from the state, which is receiving $145 million from the federal government to distribute to smaller cities and counties.

Los Baños Mayor Tommy Jones sent a letter Tuesday to HUD’s secretary as well, echoing Cardoza’s frustration. More than 1,200 of that city’s 10,000 homes have fallen into foreclosure. He believes about another 1,000 will follow suit by the year’s end.

“Our city was excited to hear that your office was planning to appropriate funds to those areas hardest hit by the housing bust,” Jones wrote. “Imagine our dismay in discovering that not only did Los Baños get slighted, but all of Merced County.”

HUD’s explanation has been that the key factors -- the number of foreclosed homes, the number of risky loans and the vacancy rates in the neighborhoods where those loans were made -- ended up showing that Merced would get less than $2 million in help. As a result, the amount gets lumped in with the money funneled to the state.

Cardoza rejects how HUD came up with its formula because it left Merced off the list and wants the agency to reevaluate where the money will be spent.