Arizona local and state government will receive more than $121 million as part of a federal grant to aid in the foreclosure crisis around the state, officials announced Friday.
The aid comes from the Housing and Economic Recovery Act of 2008, signed by the president in July as an effort to curb the subprime mortgage crisis.
The funds will be used by government agencies to renovate homes, increase home values and make more housing attractive throughout the state.
The Arizona Department of Housing, a state government entity, will receive about $38 million in funding to assist homeowners with house payments, rehabilitate dilapidated homes and buy foreclosed homes.
Additionally, seven cities will receive about $30 million to address high rates of foreclosure in those areas. The cities are: Avondale, Chandler, Glendale, Mesa, Phoenix, Surprise and Tucson.
Tempe was not designated for funding, city spokeswoman Nikki Ripley said in an e-mail.
“Our foreclosure rate is low compared to other cities,” she said. “For our more limited needs, we may apply for some of the funding that was given to the state.”
State and city officials said the funding would benefit communities by improving the condition of neighborhoods with foreclosed homes, thus boosting house values in those neighborhoods.
Fred Karnas, director of the Arizona Department of Housing, said the people who will benefit most from the funding are those who kept up with their housing payments.
“The real winners … are people who have been paying their mortgages,” he said.
Karnas added that with an average home price of approximately $200,000, it is very important that the department spends its roughly $40 million efficiently.
The department’s current budget is about $100 million, with about two-thirds of its funding coming from the federal government, he said.
Karnas said department will focus on renovating, buying and selling homes, demolishing homes that are extremely blighted, and assisting homeowners with housing payments.
David Ramirez, a spokesman with the Phoenix Neighborhood Services department, said Phoenix will use its nearly $40 million share of the funding to boost home values in the city and help people of low to moderate income buy houses.
But the funding cannot take care of the city’s problem in its entirety, Ramirez said.
“It’s going to help some, but it wont completely address or eliminate the foreclosure problem here in Phoenix,” he said.
He added that nearly 10,000 homeowners have been seriously affected by the foreclosure crisis.
Nevertheless, Ramirez said, scores of neighborhoods will be improved by the federal funding.
When the city receives the money in January, it will begin renovating neighborhoods and attracting home buyers, mainly in the west part of Phoenix.
Many neighborhoods have seen housing values drop as abandoned houses make way for graffiti, weeds and other unsightly factors, he said.
“For the most part, we’re going to try to make these houses marketable,” Ramirez said.
Reach the reporter at matt.culbertson@asu.edu.
