The nearly $60 million in federal money is aimed at selling and rehabbing abandoned and foreclosed homes.
The federal government is lending a $57.8 million hand to state and local governments efforts to get foreclosed and abandoned homes sold and occupied again.
The Twin Cities, three metro counties and the state of Minnesota will receive the money through a new unit of the Department of Housing and Urban Development (HUD) that aims to help the nation's communities hardest-hit by the foreclosure crisis.
Of the total allocation, the Minnesota Housing Finance Agency received $38.8 million; Minneapolis, $5.6 million; St. Paul, $4.3 million; Hennepin County, $3.9 million; Dakota County, $2.8 million; and Anoka County, $2.4 million. Those communities were chosen based on the number and rate of foreclosures, subprime mortgages, delinquencies and defaults. In Minnesota overall, 4.5 percent of homes started foreclosure proceedings in the past 18 months; in the targeted counties, the figures ranged from 4.1 percent to 6.7 percent.
The aid, funneled through HUD's new Neighborhood Stabilization Program, can be used to purchase foreclosed properties for rehab and sale, or in few cases, demolition. Homes that are sold through the program must be sold at or below the purchase price plus the rehab investment, and buyers must complete eight hours of homebuyer education. The money also can be used to offer down-payment and closing-cost assistance to buyers who are at or below 120 percent of the area's median income (about $67,000, depending on family size) or to create land banks to stabilize neighborhoods and encourage redevelopment.
"This is a huge boost to the Minnesota efforts that are already underway," said Megan Ryan, communications director for Minnesota Housing. "The enormity of this problem is stunning, just the time that it takes to find these properties and buy them. Many of them include very complex title issues, so it's really difficult work and it takes a lot of time. ... This infusion of federal money is a really a boost, so we can replicate what we've done so far."
The Neighborhood Stabilization Program was created as part of the Housing and Economic Recovery Act of 2008, which included $3.92 billion in funding to help states respond to rising foreclosures and falling home values.
Eighteen states received the minimum of $19.6 million; many received substantially more. With 8 percent of its homes starting the foreclosure process in the past 18 months, Florida topped the list at $541 million; 10 states received more than $100 million.
At the county level, officials' enthusiasm was more muted.
"This is a down payment on helping us with the problem," said Mark Ulfers, executive director of the Dakota County Community Development Agency. "Clearly it isn't everything that's needed. Government can't do everything to solve this problem, but it does provide another avenue to address or deal with the mortgage foreclosure crisis."
Still, he and others added, the stakes are high.
"Our real goal is to focus not just at the city level but at the neighborhood level, the areas hardest-hit, so we can stabilize that," said Kevin Dockry, manager of housing development and finance for Hennepin County. He added that a dozen empty and blighted homes over a long period can have negative effects on a neighborhood. "It takes a mental and emotional toll on people, and they start to feel trapped. They are trapped, with the number of properties on the market."
The federal money comes with strings attached. At least 25 percent needs to be targeted to help people at or below 50 percent of the state median income. Each state, city or county has to create a plan and submit it by Dec. 1 to HUD, which has 45 days to review it. The money needs to be committed within 18 months, and spent within five years.
Cities, counties and nonprofits also will be able to apply for a chunk of the state's sum. Ryan offered a few examples of programs that, on a preliminary basis, seemed like a perfect fit: A Twin Cities Habitat for Humanity program to buy, rehab and sell foreclosed properties, and programs in north Minneapolis and St. Cloud to increase affordability of foreclosed homes through investment and rehabilitation.
Maria Elena Baca • 612-673-4409