Colorado Gets $250 million Housing Boost
Colorado stands to receive more than $250 million in funding under the massive housing bill signed by President Bush on Wednesday.
Top housing officials estimate that state agencies are poised to receive $159 million for private, tax-exempt equity bonds for low- and moderate-income housing and $88 million to buy and improve foreclosed homes.
In addition, Colorado will receive millions of dollars to fund additional housing counselors.
Nationally, the law is expected to help 400,000 people facing foreclosures.
One rule of thumb: Colorado represents about 1.6 percent of the U.S. population, so that would equate to 6,400 people receiving help. However, because Colorado has a disproportionately high number of foreclosures, potentially even more people could be helped.
"This is the first major housing legislation passed since 1990," said Sister Lillian Murphy, CEO of Denver-based Mercy Housing, one of the largest owners and developers of affordable housing in the country.
The law is so detailed that a printed version weighs about 2.5 pounds.
Roy Alexander, CEO and president of the Colorado Housing and Finance Authority, said Wednesday it appears that the state will get an additional one-time boost of $159 million in private equity bonds for affordable housing. The state typically has about $400 million available each year for these bonds, he said.
"We are in the process of really studying details of the bill to get a sense of our implementation strategies, how our programs will be affected, what is the timing, and things like that," Alexander said.
Kathi Williams, director of the Colorado Division of Housing, estimated that the state will receive $88 million to buy and renovate foreclosed homes. The state currently has no budget for this, so it would be a new program, she said.
But Williams warned that the funds could cause unintended consequences. If too many foreclosed homes are bought and renovated and used for rentals, that could give those properties an unfair advantage over privately owned rentals.
"We don’t want to help one part of the market to the detriment of another part of the market," Williams said.
Also, she said, if Uncle Sam, through this program, buys homes from lenders at 90 percent of the loan amount – instead of the 30 percent to 40 percent they might receive if foreclosed homes ended up on the private market – lenders will have little incentive to try to work with struggling homeowners to keep their houses.
Others have argued that the legislation is unfair to the tens of millions of people who make their mortgage payments on a regular basis without help from the government.
The single biggest part of the legislation is $300 billion in authorization for the U.S. Department of Housing to insure more Federal Housing Administration loans, a subsidiary of HUD.
"The level of authorization is not broken down by state or geography, but will be considered on a case-by-case basis," said John Carson, director of HUD’s Region VIII, which includes Colorado.
It’s also unclear how much Colorado will receive of the $150 million earmarked for foreclosure counseling, he and others said.
Carson said people in danger of losing their homes shouldn’t wait for the new legislation to kick in on Oct. 1.
"Get in touch with a qualified housing counseling agent immediately," Carson said. "And the regular FHA programs are fully operational right now. So it’s full-speed ahead with these programs, which can help a lot of people."
(source: Rocky Mountain News)
Contact me if you have any concerns about losing your home. Also, if you’re a first-time homebuyer, you may be eligible for some of the bond money out there. It could help with a down payment and/or closing costs.