The House passed a new state program designed to help first-time buyers purchase foreclosed home in Stanislaus, San Joaquin and Merced counties. First-time home buyers would get a $7,500 refundable tax credit under the bill. Those who support this program say this could help more people buy the valley’s foreclosed homes.
Foreclosure Relief Bill Might Bring Help to San Joaquin Valley
$4B program expected to win Senate approval
By MICHAEL DOYLE
BEE WASHINGTON BUREAU
WASHINGTON — The House on Wednesday approved a controversial housing bill that supporters say could offer some relief for the San Joaquin Valley’s foreclosure crisis.
California and valley agencies, for instance, could purchase some of the region’s myriad foreclosed and abandoned homes with the help of a new $4 billion grant program.
“This is just a stopgap,” said Rep. Dennis Cardoza, D-Merced, “but it’s the best we can do today.”
Cardoza joined other lawmakers in contributing provisions to the forbiddingly technical, 694-page bill that has bounced around Capitol Hill for about a year. President Bush this week dropped his earlier veto threats, giving a green light for final approval.
The bill was approved 272-152. The Senate is expected to pass the bill Friday or Saturday.
The new federal program follows an announcement Monday by Gov. Schwarzenegger that a state program has been established to boost the valley’s economy by helping first-time buyers purchase foreclosed houses in Stanislaus, San Joaquin and Merced counties at discount prices and with reduced-rate loans.
That state initiative, called the Community Stabilization Home Loan Program, is expected to help 800 to 1,000 families purchase vacant bank-owned properties. Nearly 100 homes in the Northern San Joaquin Valley are eligible, and more are expected to be added each week.
Schwarzenegger said the $200 million program will “pump up” the region’s economy by boosting real estate sales and reducing the number of foreclosures on the market, which has been reeling from escalating foreclosures and declining values.
A big part of the federal bill props up Fannie Mae and Freddie Mac, the giant government-sponsored mortgage finance companies that together own or guarantee half of the nation’s mortgage debt.
The $4 billion grant program would enable state and local housing agencies to “purchase and redevelop” abandoned and foreclosed homes within 18 months. The government agencies could buy the properties at a discount and then choose to sell, rent or demolish the homes.
Lawmakers declare that the grants should target “areas hit hardest by foreclosures.” This will be determined by a formula that includes the number of foreclosures, the extent of subprime lending and other factors set by the Department of Housing and Urban Development.
The word “California” does not appear anywhere in the Housing and Economic Recovery Act of 2008. Nonetheless, the state in general and the San Joaquin Valley in particular could get a fair-sized chunk of the money.
More than 17,000 Northern San Joaquin Valley homes have been lost to foreclosure during the past year, according to data released Tuesday.
The number of homes repossessed by lenders continues to skyrocket in Stanislaus, San Joaquin and Merced counties, according to DataQuick Information Systems.
This April, May and June, for instance, 2,207 homes were foreclosed on in Stanislaus, pushing the county’s one-year total to 5,554. California lost 63,031 homes to foreclosure this spring and 166,087 during the past year.
San Joaquin and Merced counties have the highest foreclosure rates in the United States. In San Joaquin, 3,185 homeowners lost their property to foreclosure this spring, pushing its one-year total to 8,366. In Merced, 1,223 homes were foreclosed this spring, pushing its one-year total to 3,174.
The foreclosure problems in the valley aren’t likely to end soon, because a record number of “notices of default” were filed in almost all of California counties this spring, including Stanislaus, San Joaquin and Merced. Notices of default are the first step in the foreclosure process.
“We want to keep as many people in their houses as we can,” said Democratic Rep. Jerry McNerney of Pleasanton, whose district includes part of San Joaquin County. “This is a bill that really does help people.”
McNerney wrote a provision that boosts loan limits for veterans.
Cardoza, McNerney and Rep. Dan Lungren, R-Gold River, voted for the bill. Rep. George Radanovich, R-Mariposa, voted no.
First-time buyers would get a $7,500 refundable tax credit under the bill. Proponents say this could help more people buy the valley’s foreclosed houses.
The bill provides $180 million for financial counseling and legal assistance to help current homeowners. The bill targets some of this money for the 100 U.S. metropolitan areas with the “highest home foreclosure rates,” which will guarantee funding for the valley.
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