Arizona gets $121M for housing

But it's not designed to help people stay in their homes. Instead, the money will help the state buy up houses where the homeowners have defaulted and left. Then the state can fix them up and resell them — creating more money for more purchases — or simply tear them down if they can't be repaired.

The funding, part of the federal Housing and Economic Recovery Act of 2008, is not being divided up along normal formulas. While larger cities and counties will get their own allocations, money that otherwise would go to the smaller ones is rolled up in the $38 million being given to the state Housing Department. That agency will decide where the money is most needed.

Pima County is getting its own allocation of $3 million, with $7.2 million for Tucson.

Maricopa County is getting nearly $10 million, with about the same amount for Mesa. Glendale is in line for $6.2 million, with $2.4 million each for Chandler and Avondale, and $2.2 million for Surprise.

State Housing Director Fred Karnas said the federal law requires that the funds go toward "neighborhood stabilization."

"The goal is really to try to purchase homes in neighborhoods that are particularly hard-impacted, rehabilitate those homes and make them available for sale to folks that earn 120 percent of median income or below," Karnas said.

He said that cutoff for Arizona is about $65,000 a year for a family. And 25 percent of the money has to be earmarked for low-income families.

The idea behind such programs is to keep large areas from having so many vacant and run-down homes that it drives down the value of adjacent properties. That can have a cascading effect, as these homeowners then find their houses are worth less than what they owe.

Karnas said some of the funds will be used to buy up homes that are in good condition but are in foreclosure. He said that doesn't necessarily mean paying the banks or mortgage companies that now hold title the price they want.

"We have to be thorough in our analysis of the market and try to make these dollars go as far as they possibly can," he said.

Karnas said that if the homes are habitable, they can be sold off to those who meet income restrictions, with the state or local governments providing down-payment assistance. He said that helps "recycle" the funds, which then can be used to buy more properties.

The federal funding comes two weeks after Karnas' agency decided to divide up its state funds to put more emphasis on helping people in mortgage trouble stay in their homes and to aid first-time home buyers.

That includes $3.5 million for "eviction and foreclosure prevention," a $1 million boost from the prior year. He said that is "short-term emergency money," designed to help those who, with just one month in mortgage money, can avoid foreclosure.

Foreclosure help

Go to the Arizona Department of Housing online at www.housingaz.com or call 1-877-448-1211 toll-free.