HAMMOND | The city is eligible to receive millions of dollars in federal funding through a new plan designed to soften the effects of rising home foreclosure rates.
The U.S. Housing and Urban Development's Neighborhood Stabilization Program provides money to communities for the purchase, restoration and sale of foreclosed properties that otherwise could become abandoned and derelict.
Hammond will receive $3.8 million through the program, which can be used to acquire property, demolish or rehabilitate abandoned buildings, and offer down payment and closing cost assistance to home buyers.
"Anything we can get to stimulate our local housing situation is welcome," said Rick Calinski, executive director of planning and development.
HUD allocated the $3.9 billion approved by Congress for the program based on the number of foreclosures, subprime mortgages and mortgage defaults and delinquencies in a community.
Slightly more than 1,000 homes in Hammond were in some stage of foreclosure at the beginning of October, according to figures from the Mortgage Bankers Association that were used by HUD in determining community eligibility for the stabilization program.
The program isn't just for low-income residents, Calinski said. Applicants can earn up to 120 percent of the region's median income, which in Hammond would be $76,000 per year for a family of four.
And it's designed to move fast, said Joe Alamillo, city rehabilitation manager. HUD expects the funds to be used within 18 months of the grant agreement's execution.
Another recommended use for the money is to create "land banks" to assemble, temporarily manage and dispose of vacant land for the redevelopment of urban property -- with a built-in 15 percent discount on financing.
The program also seeks to prevent future foreclosures by requiring housing counseling for families receiving its home buyer assistance.
Money for the neighborhood stabilization program is treated as federal Community Development Block Grant funds, which are administered locally by the Hammond Redevelopment Commission.
The city's application for the program needs to be received at HUD by Dec. 1, Alamillo said, and there will be a mandatory public hearing on the proposal next month.
