Skip to content

First lot of federal aid for US states hit by high numbers of property foreclosures agreed

As one of the worst hit states it asked for $216 million but has been allocated just $34 million which will be used to help rehabilitate, resell or redevelop foreclosed properties.

It is also hoped that state intervention will stabilize neighborhoods and stem the decline of property values of neighboring homes. Foreclosed and abandoned properties are often targets for vandalism and other types of criminal activity.

'Having these funds available to help distressed communities is important to keeping these communities stable and safe for the long term,' said Colorado Governor Bill Ritter.

John Carson, regional director for the federal Department of Housing and Urban Development, said Colorado was one of the first states to qualify for the federal grants. Of 308 grants being processed, only 22 have been approved so far.

The Neighborhood Stabilization Program is expected to provide about $4 billion to states and some local communities facing high foreclosure rates with risk of properties being abandoned.

It allows governments to purchase the foreclosed homes at a discount and rehabilitate or redevelop them to prevent home values from falling.

Governments can use their grants to acquire land and property, to demolish or rehabilitate abandoned properties, to provide downpayment and closing costs to low and moderate income homebuyers. States can also set up banks to assemble, manage and dispose of vacant land.

In Colorado the state said it plans to rehabilitate 40 properties to rent to low-income families, buy 120 homes to sell or rent, demolish 45 blighted structures, provide homebuyer counselling to 120 people, help 100 homebuyers purchase and rehabilitate property and use $3.8 million to administer the programme.