RISMEDIA, August 20, 2007—(MCT)—With a growing number of homeowners facing potential foreclosure in a slowing housing market, Los Angeles officials agreed Tuesday to study creating a special emergency loan fund.
As part of the move, the City Council’s Housing, Community and Economic Development Committee also said it wants to find $100,000 to help pay for a second effort by Operation Hope to educate and help at-risk homeowners.
But reluctant to follow a proposal by Councilman Richard Alarcon to tap into the city’s Affordable Housing Trust Fund, the panel said it instead wants to review whether to develop guidelines and look for other sources of funding.
“We have spent a long time building this fund up and I think it would be shortsighted to take money from it now,” Council President Eric Garcetti said. “It is the ultimate case of borrowing from one fund to pay off another.”
Alarcon, however, said the $100 million Affordable Housing Trust Fund, seemed a logical source of funding for his proposal. He had proposed taking $5 million from the fund for the effort.
“We have people losing their homes and that creates other problems,” Alarcon said. “If people lose their homes, they will be turning to the government for help.
Rather than have people go into poverty, we should try to help them.”
Alarcon’s proposal called for making low-interest loans of up to $10,000 each to help people caught in the bind resulting from subprime mortgages and a drop in the housing market.
Councilman Herb Wesson, who chairs the committee, asked for a report on other potential sources of funding for the proposal while guidelines and procedures are developed.
Alarcon said his concern is that any delay could mean families are evicted from their homes.
“The fact of the matter is that we will not be able to help everyone, but we might make a difference for five percent of the people out there,” Alarcon said.
He also noted the Los Angeles Neighborhood Housing Services organization has offered $2 million for the effort.
But Garcetti said the city can help with the Operation Hope effort, first launched in April, that provides information to homeowners.
Under the program — available by calling 1-888-388-HOPE — homeowners get information on how to negotiate with lenders, apply for loan modifications and avoid foreclosures.
Garcetti said public service announcements have been prepared and an additional $400,000 is expected to be made available from financial institutions.
Copyright © 2007, Daily News, Los Angeles
Distributed by McClatchy-Tribune Information Services.
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