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Low-Cost Loans Brighten Worn Homes

May 29, 1986|DAVID FERRELL | Times Staff Writer

Agustin Herrera had to face it: The house was a mess.

After nearly 80 years of wear and tear, the two-story Victorian home in San Pedro had virtually none of the features that dominate the real-estate ads.

The plumbing leaked. Electrical shorts caused lights to go on and off. Broken shingle siding and faulty insulation were among the least of the problems.

"The ceilings in the bathroom were literally falling down," Herrera remembered. "The plaster had fallen out in big chunks. The carpet was shot. The old wood-frame windows were falling apart. Some of the steps were cracked and ready to break--definitely a hazard."

If some homes deserve space in Sunset magazine, the house Herrera and his wife purchased two years ago deserved a write-up by a legion of building inspectors.

"In our opinion," he recalled, "the whole place was fit to be condemned."

Despite its drawbacks, Herrera saw the home as a place where he and his wife could raise their three children and own property as an investment. And now, thanks largely to an 8-year-old program administered by the city of Los Angeles, Herrera's one-time nightmare is becoming a dream house.

Using low-interest loan money designed to improve targeted areas of San Pedro and Wilmington, Herrera is adding the final touches to a thorough overhaul. Textured blue stucco has replaced the tattered shingle exterior. The ceilings, windows and carpeting are new. So are the wiring and plumbing. No longer do the lights flicker, and no longer does ugly black mold cling to the den and bedroom walls; the walls are new, too.

"We left the frame and the roof and the foundation, and we started over," Herrera said.

The program, known as the Homeowners Opportunity Maintenance Effort (HOME), is designed to correct building-code violations and to breathe fresh life into lower-income communities where residents are often unable to afford home repairs.

In 10 selected areas of Los Angeles--from the harbor to Highland Park, Pacoima and Boyle Heights--federal loans up to $27,500 are being made available to homeowners at interest rates of 10% or less, depending on family size and income.

A family of four, for example, may qualify for a 20-year loan without interest if the family's yearly income is below $24,150. The same family earning less than $16,600 may qualify for an interest-free loan that need not be repaid until the home changes ownership.

"(Even) if a person can't qualify for a bank loan, we can fund them," said program manager Solomon Banks.

Apartment owners are also eligible for the program. Regardless of income, they can borrow up to $57,500 for a four-unit building, at 10% interest over 20 years, if their properties are judged in need of refurbishment.

Since 1978, the program has distributed loans exceeding $87.1 million to help restore about 8,000 structures, according to Banks. In many cases, he said, buildings had been so poorly kept that plumbing and wiring had become health and safety hazards.

"You have to bring them up to (safety) code standards," he said. "They need electrical and plumbing work. They often need painting. We're able to help add a bedroom if there is overcrowding. We can also help do many other kinds of things--put new tile in the bathrooms, put on a new roof."

Amado Flores, project director for San Pedro and Wilmington, said about 100 property owners a year have used the program since portions of the two areas became eligible in recent years.

San Pedro became a part of the program in 1979. To qualify for loans, residents need not meet income limits, which are used only to establish interest rates. But all borrowers must live in the targeted community--a lower-income, turn-of-the-century neighborhood bounded by Gaffey, Beacon, 9th and 22nd streets.

In Wilmington, a 16-block area became a part of the program in 1982. The area is roughly bounded by Alameda, Anaheim and Sandison streets and Wilmington Avenue.

Not all of the homes in the areas are poorly kept, Flores said. But he has seen cases where porches are falling off, where heaters do not work and families huddle through the winter in blankets, and where damaged roofs invite flooding during rainstorms.

Three loan specialists in the program's South Bay regional office screen applications and work with homeowners and contractors to assure that the improvements are carried out, Flores said.

"This is no-frills," he said. "We don't put in new dens, swimming pools or saunas."

The program is not a policing effort to enforce building-code laws because participation is voluntary, Flores said. Yet those who apply for loans are asked to repair structural violations first--and often, in low-income communities, the violations are extensive.

"In one house in Wilmington, you could see the sky," Flores said, referring to roof damage, not skylights. "Some people only come here as a last resort. Some people only go to a doctor when they're dying, and some people only come to us when their house is falling apart."

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