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Pasco Revising Foreclosure Aid Program

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By Carl  Orth | The Suncoast News

Published: November 12, 2008

NEW PORT RICHEY - More strings might come attached to federal aid to Pasco County for a foreclosure rescue plan than county commissioners first thought.

Federal authorities are frowning on Pasco's original proposal, commissioners were told this week.

Commissioners had approved a plan diverting most of about $20 million from federal aid into down payment assistance to put buyers into foreclosed or abandoned houses.

Officials at the U.S. Department of Housing and Urban Development, however, have indicated they might reject the Pasco plan, George Romagnoli, Pasco's community development director, reported.

"We received some, I wouldn't say angry, but some critical e-mails and discussion on our original proposal," Romagnoli said about correspondence from HUD.

The county proposal must be submitted to HUD by Dec. 1. If the Pasco plan is rejected, the county would have to reapply for the federal aid and might miss out on getting any money, Romagnoli said.

HUD and the Federal Housing Administration want foreclosed or abandoned houses brought up to current codes with the federal aid before the houses are put up for sale. Romagnoli said rehab repairs might cost anywhere from $15,000 to $35,000 per house. Then down payment assistance could be used for people buying the fixed houses.

Other federal funds would help nonprofit agencies create permanent housing, such as Catholic Charities' Bethany Apartments, in Dade City.

A revised plan Romagnoli presented would set aside $6.5 million for down payment assistance, about one-third of the federal aid Pasco could get.

Remodeling the foreclosed houses might make sense in an ordinary market, Greg Armstrong, president of West Pasco Board of Realtors, testified before commissioners. People can recoup their investments in repairs.

With a glut of 5,700 Pasco houses for sale west of the Suncoast Parkway, however, any foreclosed home that is remodeled probably would not fetch a higher price in this depressed market, Armstrong insisted.

Armstrong believes Pasco needs to apply at least $10 million of the federal aid toward down payment assistance as the fastest way to help the real estate market here to recover.

Armstrong would help place home buyers into the foreclosed home first, and then the new homeowner could do repairs, perhaps with some assistance. Many of the foreclosed houses are already in good shape, he argued.

Commissioner Michael Cox agreed it might not make a lot of sense to spend $30,000 in upgrades on a home valued at $60,000.

"That tends not to make sense, but we are talking about programs from the federal government," Cox said with a chuckle. Cox originally thought federal authorities would give the county a lot of latitude on how to spend the federal aid, but that doesn't appear to be the case.

"I must sadly report" 212 houses sold on courthouse steps, Armstrong concluded. "These are staggering numbers and we must take decisive action and quickly to stop this flow."

Carl Orth can be reached at 727-815-1068 or corth@suncoastnews.com.

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