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House aid shrinks as need rises

By ANDREW SKERRITT
Published August 26, 2007

It was an innocuous item in the middle of last week's Pasco County Commission meeting.

The Community Development Division wanted to sell 15 properties for a total cost of $1-million to $2-million.

Even though it looked like no big deal, it was. The foreclosure properties were once occupied by families who had bought their first homes with county help.

"We've never had so many at one time," said division head George Romagnoli, whose agency dealt with about 30 foreclosures this year. "It's an extraordinary number this year."

This is all tied to bigger national problems. The real estate bust, combined with the credit crunch and the state's budget woes, is complicating life for working people who are looking for the county's help in buying that first house.

For those who don't know, counties Pasco included usually do a pretty brisk business in helping first-time buyers get out of their rented apartment into their piece of the American dream. They provide help up front with the down payment, and the loan is repaid when the homeowner sells the property or refinances the house. At its peak, Romagnoli and his staff helped 390 families with down payments in one year. That's down to about 150 so far this year.

My previous conversation with Romagnoli was during the real estate boom. Then, some of those first-time home buyers, giddy with the exuberance of runaway real estate values, were flipping their houses and walking away with the profits.

That seems like such a long time ago. Instead of quick resales, the worry is now foreclosures. And the timing couldn't be worse. The agency depends on loan repayments to help other first-time home buyers with their down payments.

Under better economic circumstances, the Pasco agency would be collecting $3-million a year in loan repayments. It's expecting only half that amount this year, Romagnoli said.

And that's only part of the story. The state usually sends the county about $3-million in July for helping first-time home buyers. With the state's money problems, however, Tallahassee has decided to disperse housing trust money in four smaller checks instead of one lump sum.

The result: If you are in Pasco and want the county to help with a down payment on your first home, you're out of luck - the home buyers classes are still being offered, but the county isn't taking any more down payment loan applications for the rest of the year.

(In Hernando, the situation is a little better. The Hernando Housing Authority is still processing down payment applications but won't take any new ones until next year.)

Talk about terrible timing. Real estate prices are down, but credit is hard to get and Pasco has no money available for down payment assistance until at least January, Romagnoli said.

So what happened last week was about damage control. By buying the foreclosed properties and reselling them, it's the only way to ensure that the Community Development Division gets its money back.

The properties will be sold to the nonprofit Tampa Bay Community Development Corp., which will fix up the houses and resell them. That will take time.

Who knows? By then, money might be flowing again.

Andrew Skerritt can be reached at (813) 909-4602 or toll-free at 1-800-333-7505, ext. 4602. His e-mail address is askerritt@sptimes.com.

[Last modified August 25, 2007, 20:23:29]