The Minnesota Housing Finance Agency is expected to appropriate $38.8 million in February to cities, counties and community housing organizations in an effort to stabilize neighborhoods hit hard by foreclosures.
Speaking before the House Housing Finance and Policy and Public Health Finance Division Jan. 27, Chip Halbach, executive director of Minnesota Housing Partnership, said the funds are part of a cash outlay called the Neighborhood Stabilization Program from the U.S. Department of Housing and Urban Development. Organizations hoping to receive their share were required to submit applications to the state agency by Jan. 28.
Another $20 million was previously awarded to Anoka, Hennepin and Dakota counties and the cities of Minneapolis and St. Paul, according to Jeanette Blankenship, an agency housing policy specialist.
Despite available resources, itís still not enough to meet the needs of today, Halbach said.
ďEven though the amount of federal resources coming to the state is large, itís not making a sizable dent in some of the goals that were laid out before we had the impact of the foreclosure crisis,Ē Halbach said.
Reasons for the unmet goals include failed foreclosure prevention programs, he said. For example, the Hope for Homeowners Program relied on banks to voluntarily reduce the principal on mortgage loans, which didnít happen enough. Also, a $7,500 tax credit for first-time homebuyers isnít popular because it has to be paid back.
Going forward, agency officials are mindful that some federal funding resources, such as the Neighborhood Stabilization Program, have shifted from guaranteed funding formulas to a competitive grant process that does not necessarily mean continued funding.
ďSo the dollars available from the state are very critical to fill in around what the federal government is making available,Ē Halbach said.
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