Merced County leaders demand $30 million in foreclosure aid

11/07/2008 3:26 PM

11/07/2008 4:34 PM

Merced County's leaders demanded Friday that the state give the area $30 million in foreclosure aid to help it restore neighborhoods wrecked by the housing market collapse.

As part of the Neighborhood Stabilization Program, California was given $145 million by the federal government to disburse to cities and counties. More than $300 million went directly to cities and counties.

Merced County and its cities weren't included.

Area leaders continued to voice frustration that they didn't get included in the first round of funding, but have accepted that they'll be going through the state for help.

Grants should be awarded in March and executed in May.

The state is in a hurry to get the money to cities so they can buy and renovate foreclosed homes, and tear down ones that are eyesores. "I promise you we'll spend every dime as quickly as possible," Mayor Ellie Wooten said during the meeting.

The plan is to help get low-income residents into homes and reduce the number of vacant homes so prices stabilize. Across the county, on average, homes have lost 40 percent of their value.

On Friday, the state Department of Housing and Community Development will announce how it will probably divide up the money. Cities and counties will have a couple of weeks to plead their cases before the state sends its final report to the federal government for approval.

Congress passed last summer the Housing and Economic Recovery Act, which set aside nearly $4 billion in foreclosure aid for the country.

California officials, knowing the state had roughly 25 percent of the country's foreclosures, expected to get about $1 billion. Based on the federal government's formula, fiercely criticized by some, it only received $529 million.

As a result, department official Frank Luera said, the state won't be able to help every city and county that needs it.

Merced County, along with its six cities, sent a report to Lynn Jacobs, the department's director, highlighting the area's devastation through newspaper articles, unemployment rates and foreclosure figures.

The alliance asks the state to keep governments that have already received the aid from double-dipping, to favor cities and counties that are working together and to look at percentages rather than raw numbers, which may be misleading.

Smaller cities, compared with larger ones, may have fewer foreclosures but be affected more, they argue.

"Merced County is the hardest-hit county in the whole nation," Los Banos Mayor Tommy Jones said. "There are families behind these numbers hurting."

Now, after delays, there may be some money coming down the pipeline.

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