San Diego to Use $9.4 Million in Federal Grants to Buy Foreclosed Homes

Officials of San Diego’s Housing Commission have proposed before the City-County Reinvestment Task Force to spend about $9.4 million in federal grants from the U.S. Housing and Urban Development (HUD) to fund two programs aimed at reducing the number of foreclosed homes in the city.

The first proposal is for the city to use the grants to fund loans by first-time homebuyers who want to purchase foreclosed properties.

The city allocated $6.4 million to assist 92 homebuyers purchase properties valued at $200,000 and additional $30,000 for rehabilitation. It will also assist 75 buyers to purchase properties valued at $250,000 and additional $30,000 for rehabilitation cost.

The other proposal is for the city itself to buy 30 foreclosed homes, rehabilitate and rent them to low-income individuals or families. The commission plans to ask the HUD to give tenants the option to buy the homes they are renting at 5 percent less than the market value.

HUD requires that one-fourth of the grant should be used to help families earning less than half of the $39,500 median income in the region.

Houses covered by this type of the initiative feature three bedrooms and it would cost the city around $300,000 to buy and rehabilitate them,

The initiative would be focused on hardest hit neighborhoods in the city, including Barrio Logan, City Heights, Encanto, Golden Hill, Nestor and North Park.

The estimated 122 foreclosed homes that would be bought from these neighborhoods using the grants represent two percent of the estimated 6,111 properties in San Diego County that completed the foreclosure proceeding from July 2007 to September 2008.

Rick Gentry, chief executive officer for the Housing Commission of San Diego, clarifies that the grants could not be used to help homeowners remain in their foreclosed homes.

HUD also gave San Diego County $5.1 million and Chula Vista $2.8 million in federal grants to address the housing market crisis.