Grants to Buy and Fix REO Property in 3 California Cities

Three valley cities in California have collaborated with the Economic Development Agency in Riverside County to apply for about $1.8 million grants from the Neighborhood Stabilization Program (NSP) of the federal government.

The cities of Palm Desert, Coachella and Palm Springs will use the funding to purchase and rehabilitate REO property in the area. They will then resell, rent or develop rehabilitated properties.

According to requirements for applying and obtaining the NSP grant, all applicants must agree to purchase and renovate foreclosed properties to develop, sell or rent, demolish structures that became eyesores in their neighborhoods, redevelop vacant or demolish properties, develop land banks for foreclosed properties and create financing mechanisms to allow low income and moderate income families to buy homes with affordable rates.

The grant will benefit residents and neighborhoods by reducing the number of REO property with dirty pools and overgrown lawns. Also, allowing foreclosed properties to be occupied will reduce potentials for vandalism, vagrants and thieves.

The NSP grant is expected to give opportunity to residents of California who want to own a house but could not afford to buy a regular priced property. It would also help a lot in addressing the growing number of REO property in California which blighted neighborhoods and communities.

Coachella’s plan in line with the NSP requirements will focus on attracting first-time homebuyers who have moderate income to occupy the city’s REO property. Homebuyers who have moderate income are said to be the most overlooked population segment and the city believes that they deserve the same opportunities being afforded to low income families.

Data from RealtyTrac showed that foreclosed homes in Palm Springs totaled 676, 519 in Coachella and 253 in Palm Desert.

Statewide, California was ranked the second highest state nationwide in terms of foreclosure rate last month, despite a drop of 4 percent in repossession activity from April. Last month also showed foreclosure filings made on 92,249 properties. The figures were the highest total among other states, representing about 23 percent from the May 2008 total.

Meanwhile, bank foreclosures in California declined by 1 percent compared with April figures. The number of defaults also went down by 18 percent. However, scheduled auctions of REO property went up to 18 percent.

California cities included in the top 10 with high foreclosure rates nationwide are Stockton, Modesto, Riverside-San Bernardino, Merced, Bakersfield and Vallejo-Fairfield.

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