$20M in funds infused into RI housing

PROVIDENCE -  Rhode Island will spend nearly $20 million in the coming year to rehabilitate foreclosed homes, demolish blighted properties and help first-time homeowners make down payments to help recover from the subprime mortgage crisis, Gov. Don Carcieri said Wednesday.

The funding that Congress approved for states this year could create 100 affordable homes for lower-income families, state officials said.  But it does not include money to help prevent foreclosures. And Rhode Island needs at least three times that spending to reduce homelessness and foreclosures, said Richard Godfrey, executive director of Rhode Island Housing, a state-chartered lender that helps low- and moderate-income families buy homes.

Rhode Island has been particularly stung by the mortgage crisis, with more than 5 percent of homeowners at least 90 days behind in their mortgage or in foreclosure during the third quarter, according to the Mortgage Bankers Association.

State officials estimate that up to 5,000 homes have gone into foreclosure in the past year. godfrey said he hopes economic stimulus plans being developed by
President-elect Barack Obama and Congress will including funding for housing.

“No one has provided any money to kick into a transaction to save a family from foreclosure,“ he said. Foreclosed homes that cannot be quickly sold in Rhode Island’s urban communities can become magnets that attract vandals, squatters and pose a safety hazard.

“It has a cascading effect,“ Sen. Jack Reed said. “If one home is foreclosed, the value of other homes begins to decrease almost immediately.“  The new effort announced Wednesday, called the Neighborhood Stabilization Program, will be overseen by the state Office of Housing and Community Development and Rhode Island Housing.

Eleven communities suffering from the worst rates of foreclosure will receive the money, including Providence, Pawtucket, Woonsocket, Cranston and Central Falls. The program earmarks about $11.4 million to buy, rehabilitate and repair foreclosed or neglected homes.

Most developers who participate in the program will likely be nonprofit developers interested in building affordable housing for lower-income residents, Godfrey said.

Under the program, people with low- and moderate-incomes can receive financial counseling before a sale, assistance making a down payment and get home improvement loans allowing them to bring deteriorating properties into compliance with safety codes.