Atlanta area to get $70 million for foreclosure problems

About $70 million in emergency federal aid is being made available to metro Atlanta cities and counties to tackle the region’s foreclosure crisis, the U.S. Department of Housing and Urban Development announced Friday.

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The money, part of a $4 billion nationwide program approved by Congress earlier this year, will help local governments buy or redevelop distressed foreclosed properties “that otherwise become sources of abandonment or blight,” HUD Secretary Steve Preston said.

The $70 million will be spread among the area’s five largest counties and the city of Atlanta. The amount of grant money available to each jurisdiction varies, based on level of need determined by HUD. DeKalb County is set to receive the most money, $18.5 million, followed by Atlanta with $12.3 million.

Local governments have been asked to submit a plan to HUD by Dec. 1 detailing how they would use the money.

Preston said there’s not enough money available to provide a comprehensive solution to any community’s problems. Instead, the program is designed to help local governments target their most hard-hit areas.

HUD officials said they planned to release more information on Monday about how the program will work, including what types of properties will be eligible.

DeKalb County CEO Vernon Jones said he envisions the county becoming a one-stop real estate shop, where the government would buy foreclosed homes and provide mortgages for prospective buyers.

The details of the plan are still being worked out and must be approved by HUD. Jones said he’s optimistic it will make a difference.

With $18 million, “we can buy quite a few homes,” Jones said. “We can take our neighborhoods that are unstable and make them stabilized so they can become vivacious again.”

The county will carefully screen home loan applicants — a step Jones said many mortgage companies neglected to take in recent years. In addition, buyers will be required to meet with a consumer credit counselor before any deal is closed.

Numerous metro Atlanta neighborhoods have been hit by waves of foreclosures, creating a vicious cycle in which home values become further depressed, sparking even more foreclosures.

Foreclosure rates in metro Atlanta range from 9.9 percent in Clayton County to 3.7 percent in Cobb County, according to HUD.

Wayne Flanagan, a real estate broker with ReMax who specializes in bank owned property, said the market for foreclosed homes in some of the hardest-hit areas has deteriorated to the point where it can be hard to find buyers.

“Because of the sheer number of bank-owned properties and the condition of most of the properties, they’ve been reduced in value to the point where they cost less than most people’s cars,” he said. “But they are not in a condition where anyone can live in them, and it’s attracting a lot of vagrants. Even when they are boarded up, it’s a blight to the city.”

Flanagan said local governments moving in to buy some of these homes could help act as a catalyst to encourage others to get back into the market.

“Wisely done, it could be a very positive thing,” he said. “We’ll just have to see.”

HUD officials said the funds, known as Neighborhood Stabilization Grants, can be used in a range of ways. Governments can buy land or property, demolish or rehabilitate abandoned homes, offer down payment and closing cost aid to low and moderate-income buyers, as well as create “land banks” to buy, manage and later dispose of vacant land.

Clayton County Commission Chairman Eldrin Bell said the grant money should help expand the county’s ongoing effort to deal with foreclosures, including credit counseling and a “triage” system that directs families toward services that can help them avoid foreclosure.

Clayton is set to receive $9.7 million.

“It’s a significant shot in the arm,” Bell said.

Community allocations, with local foreclosure rates in parentheses:

• Atlanta: $12,316,082 (5.6%)
• Augusta: $2,473,064 (6.8%)
• Clayton: $9,732,126 (9.9%)
• Cobb: $6,889,134 (3.7%)
• Columbus-Muscogee: $3,117,039 (6.3%)
• DeKalb: $18,545,013 (6.4%)
• Fulton: $10,333,410 (5.4%)
• Gwinnett: $10,507,827 (4.6%)
• Savannah: $2,038,631 (6.0%)
• Statewide: $77,085,125 (5.1%)