Sunday, Nov. 8, 2009 | 2 a.m.
- Federal funds meant to ease valley’s foreclosure problems (7-7-2009)
- HUD providing $18.5 million to help purchase foreclosed homes (3-30-2009)
- North Las Vegas eyes foreclosure solution (11-14-2008)
- State plan could ease pressure of ‘tsunami’ (10-23-2008)
Eve Barrozo’s street is one of only five in the valley where the county has purchased houses under an 8-month-old program aimed at “stabilizing” neighborhoods.
The retiree stood in front of her home Friday and drew a circle of silence with her right hand that helped explain why the county is now the owner of 6844 Francis Celia Ave.
That house across the street, empty, Barrozo said. The two to the right, empty. The one to the left, the bank just had the auction. The one in back, someone finally rented it.
Like most Las Vegas Valley residents, Barrozo has seen her neighborhood, a few blocks away from Sam Boyd Stadium in East Las Vegas, change under the onslaught of foreclosures.
“These people,” she said, pointing to the corner house, “we only talked when we picked up the mail. But I miss the sound of their kids in the back yard.”
And, of course, most of the value of Barrozo’s house has also disappeared, dropping from nearly $250,000 only three years ago to $100,000 now.
The Neighborhood Stabilization Program was created, in part, to try to help people like Barrozo. The Housing and Urban Development Department gave Las Vegas Valley municipalities $64.3 million this year to buy homes then renovate and sell them to low- and moderate-income families. The local governments had hoped to turn around hundreds of houses — and help at least as many families in the process.
But nearly halfway into the 18-month window for spending the money, a Sun analysis of Clark County, Las Vegas and North Las Vegas records shows that the local governments haven’t made much headway. Beyond the five homes purchased, only nine more appear to be on deck. And not any have families living in them yet.
Officials say the primary obstacles hampering local governments in launching the program have been ongoing changes in rules and, more recently, the volatility of local real estate due to investors swooping in.
Meliah Schultzman, who has been monitoring the federal funding from the Oakland office of the National Housing Law Project, said market conditions have been the primary problem for governments nationwide trying to roll out the plan for stabilizing neighborhoods.
“Generally, funds have been spent much slower than expected,” Schultzman said. “What we’ve heard is that investors are snatching up properties with cash much faster.”
Schultzman said experts are projecting that up to one-third of the 306 state and local governments with neighborhood stabilization funds might wind up missing deadlines, meaning the governments would have to return unspent funding.
Locally, the hope was that millions of dollars flowing into the valley would buy hundreds of houses by September of next year. The money also goes to nonprofit organizations involved in purchasing, renovating and helping homebuyers.
Mike Pawlak, who oversees the county’s $30 million from the community resources management division, is the local official who has had the most success with the program so far. The county bought the first five houses and has seven more in the pipeline.
To get to this point, he said, the county spent two months reviewing more than 700 properties on Fannie Mae and Wells Fargo Web sites in the 13 ZIP codes the county is targeting. Each municipality chose ZIP codes according to foreclosure rates and other factors. From that initial group, the county determined that 140 houses fit the program’s guidelines. After inspection, the county asked for prices on 38. But most of those were quickly bought by private bidders, faster and richer.
Pawlak said the program requires properties meet standards including environmental and historical reviews. This takes time. Also, governments must buy the houses at
1 percent below appraised value. Initially, that figure was 10 percent, but HUD changed the rules. Still, investors are willing to pay more.
Tim Whitright, who oversees Las Vegas’ $20.7 million in the Neighborhood Services Department, wrote in an e-mail that the “Las Vegas housing market for homes valued at or below $250,000 is experiencing an increased sales rate in which ‘cash carrying’ investors are successfully bidding list price plus 10 percent or more on foreclosed homes.”
Whitright also wrote that many investors are not even taking the time to inspect houses because real estate agents “are telling them that a delay of just 24 hours will cost them the opportunity to buy.”
In late October, the county began using a coalition of nonprofit organizations called the National Community Stabilization Trust as an end run around investors. Organizations formed the trust to serve as a go-between for governments and banks. Locally, the trust filters properties in target ZIP codes and sends e-mail lists to Pawlak. It also gets banks to give the county a “first look” at properties.
Using this system, in only two weeks, sellers have accepted offers on an additional five houses. Pawlak said working with the trust is the sort of tweak that may move the program closer to its goals, but he said the rate at which this occurs depends on how many banks work with the trust, and how many houses banks release onto the trust’s lists.
Kenny Young, senior assistant to North Las Vegas’ city manager, has also begun using the trust for his city’s $8.6 million program. North Las Vegas is close to closing on two houses. He has also run across properties in the city’s three target ZIP codes that are not listed with the trust. “There are properties listed with brokers, and the broker won’t want to deal with us,” he said.
Frustrated with the situation, Young allowed that “we’re not as far ahead as we wanted to be.”
Still, Pawlak remains optimistic about the impact the program could have on the gap-toothed habitation of the valley’s neighborhoods, empty houses dotting the landscape. He points out that local governments will first renovate houses in the program then counsel homebuyers before they purchase or rent those houses, two steps that should create more stability across the valley.
At the same time, he and other analysts said, they wish the program allowed more leeway in dealing with on-the-ground realities of the real estate crisis. For example, the county could help more people if it could use the federal money for helping homebuyers purchase houses through short sales, instead of waiting for them to go through foreclosure, he said.
Schultzman said there is some talk in Congress about extending the program’s deadlines, and of allowing governments to buy abandoned as well as foreclosed houses.
“Jurisdictions are not used to having this much money and being told to spend it so quickly,” she said. “If they didn’t have these statutory deadlines, they would be able to more effectively meet the program’s goals.”
Meanwhile, Eve Barrozo eagerly awaits for a family to move into the empty house across the street, the one with the flower pot out front that used to hold yellow pansies.
“It would be nice,” she said. “Right now, it’s so quiet around here.”