Pasco receives $400K help from feds

Ingrid Stegemoeller, Herald staff writerJanuary 8, 2009 

A new federal program designed to help cities and counties struggling with home foreclosures will provide Pasco with about $400,000.

The Neighborhood Stabilization Program was passed as part of the Housing and Economic Recovery Act of 2008 to help local governments facing a high number of foreclosures.

"It's a good opportunity to address the relatively small problem that we have," said Gary Crutchfield, Pasco city manager.

Pasco was the only one of the Tri-Cities to qualify for program money, according to the state Department of Community, Trade and Economic Development.

Decisions were made based on areas with the greatest percentage of home foreclosures, the highest percentage of homes financed by subprime loans and those most likely to face a significant rise in the rate of home foreclosures, according to the state.

CTED used information gathered from a variety of agencies by the Local Initiatives Support Corporation, which developed scores for cities and counties based on requirements for the national program.

Subprime mortgages make up an estimated 13.28 percent of all mortgages in Pasco, compared with 9.38 percent in Kennewick and 7.21 percent in Richland, according to LISC.

Statewide, that number is 8.93 percent.

Pierce County's subprime rate is 13.42 percent and Tacoma's is 16.63 percent.

Subprimes in Spokane make up 9.36 percent of mortgages and in Yakima 12.24 percent.

As for the percent of home loans in foreclosure, Pasco's rate is 1.77 percent, while Kennewick's is 1.54 percent and Richland's is 1.1 percent, according to LISC.

Across the state, 1.42 percent of loans are in foreclosure, including 2.19 percent in Pierce County, 2.69 percent in Tacoma, 2.44 percent in Yakima and 1.52 percent in Spokane, according to LISC.

Nationwide, nearly 3 percent of mortgages were in foreclosure at the end of the third quarter of 2008, according to the Washington D.C.-based Mortgage Bankers Association,

That's the highest rate since the organization started collecting information in 1979.

"As a state, we're not as bad as other places in the country," said Bill Cole, managing director for the community development block grant program for CTED.

The $28.2 million designated for Washington is a small slice of nearly $4 billion for the national program.

California is receiving about $529.6 million, Florida about $541.4 million and Michigan about $263.6 million.

"Twenty-eight million dollars is not a lot of money, given the problem, for the entire state of Washington," Cole said.

Money can be used to buy land and property, demolish or rehabilitate abandoned properties and to offer downpayment and closing cost assistance to people with incomes at or below 120 percent of the area median income, according to the U.S. Department of Housing and Urban Development.

By Jan. 15, cities and counties must submit a letter of intent. Detailed outlines and timelines for planned activities are due April 1.

Crutchfield said Pasco intends to submit a letter of acceptance of the money.

"We've got a couple months to take a look at the options and walk through them," he said.

Willie Stewart, owner of Divine Realty in Kennewick, is an REO (real estate owned by banks) agent, meaning her business focuses on listing foreclosed homes.

She said her business continues to bustle, though she's gotten fewer foreclosure assignments lately from bigger firms such as Fannie Mae because they've put temporary halts on foreclosure sales.

Pasco seems to have a bigger foreclosure problem because when the market was hot, more homes were being built there at more affordable prices, Stewart said.

"There were more loans made with minimal downpayments in Pasco only because there were more new homes," she said.

It remains to be seen how much effect the money will have, Cole said.

"I think it will be helpful, especially in concentrated areas where there are foreclosed homes," he said.

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