Foreclosure aid program lacks results

Last July, the federal government decided to rush billions in emergency aid to local governments in hopes of saving areas collapsing from rampant foreclosures.

Even though the Neighborhood Stabilization Program was designed for quick results, it hasn’t produced anything so far but lots of red tape and policy debate among local government officials.

Local officials say it will be at least June before the first property gets bought or hammer gets swung. The first results on any scale now aren’t expected until late summer at the earliest.

The Neighborhood Stabilization Program is supposed to help shore up neighborhoods by having local governments buy, repair and sell distressed properties to low- and middle-income buyers. They can also rent properties that don’t sell.

Under the program, local governments have broad leeway in whether they do the work themselves, contract with house flippers or turn the work over to contractors.

Neighborhood leaders and activists say they need results — and now — because the foreclosure crisis has blighted neighborhoods with abandoned properties, and it shows no signs of slowing down.

Last Thursday, a local nonprofit released a study showing that already-low median sales prices in high-foreclosure neighborhoods in metro Atlanta’s five core urban counties fell 16 percent over the last six months of 2008.

“We wish things would move faster,” said Robert Welsh, with the Dirty Truth Campaign, a group that tracks foreclosure impacts in ZIP code 30310, which includes Pittsburg, Sylvan Hills and other southwest Atlanta neighborhoods. “It’s a big problem, but at this point, we’ve got to roll with what they have going.”

John O’Callaghan, president of the Atlanta Neighborhood Development Partnership, an affordable housing nonprofit, also said he wished the program could move quicker. His group conducted the study, which showed sales prices falling across metro Atlanta.

O’Callaghan hopes to work with the federal money in several counties to counteract the continuing slide.

“I’m confident it will all hit the streets by June or July, and we will see houses ready for occupancy by September,” said O’Callaghan.

Federal officials say the Neighborhood Stabilization Program has moved at breakneck speed for a new federal program.

Congress appropriated $4 billion in July 2008.

The federal Department of Housing and Urban Development then had to scramble to write up rules and get local governments briefed by year’s end, with hopes of handing out awards early this year.

“Everybody here is satisfied with the pace of progress,” said Brian Sullivan, with HUD. “Generally speaking, our interest is to balance doing it fast with doing it right.”

Under the federal formula, money was set aside for states, cities and counties based on foreclosure activity, delinquent loans and other factors.

Georgia was approved for $153 million with more than $70 million earmarked to help metro Atlanta counties. States such as Florida and California each got more than $500 million.

Because of the program’s broad latitude, city and county officials have spent the past few months writing up their own plan, seeking proposals from companies to do the work, and going through their own red tape.

“It’s wise,” said Melvin Richardson, who’s overseeing Fulton’s program, “to be cautious with this process.”