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House votes to end foreclosure fix-up program

An initiative championed by Rep. Maxine Waters to fix up run-down foreclosed properties could become a casualty of the Republican push to slash federal spending.

March 17, 2011|By Richard Simon, Los Angeles Times

Reporting from Washington — The congressional hearing had been called to take testimony about a Republican plan to shut down a nationwide program championed by Rep. Maxine Waters that uses tax dollars to buy and fix up foreclosed properties.

When it was her turn to speak, the fiery Los Angeles Democrat said: "I don't have any questions. I just have a lot to say."

And she did.

"Would you like to live next to these run-down, rat-infested properties, sprayed with graffiti and vandalized?" she asked. Then she railed against the Republican "mania to achieve fiscal austerity at all costs." And she displayed pictures of foreclosed properties that have become neighborhood eyesores.

But her defense of the program at two recent hearings was to no avail. The House Republican majority, in defiance of a White House veto threat, voted Wednesday to eliminate Waters' program, a casualty of its drive to stem Washington's red ink. The measure, approved 242 to 182, to rescind the remaining $1 billion faces uncertain prospects in the Senate.

The vote came as Republicans, who took control of the House in January, have sought big cuts in spending for a wide range of domestic programs, including other federal aid to cities. Republicans on the House Financial Services Committee recommended the program's termination, calling it costly and ineffective.

Since it was created in 2008, the initiative has grown into a $7-billion program, prompting Rep. Judy Biggert (R-Ill.) to remark recently, "Ronald Reagan said the closest thing to eternal life on this Earth is a government program."

The program gives local and state governments and nonprofit groups money to buy and renovate an estimated 100,000 run-down properties for resale to low- and moderate-income families or convert them to low-income rental housing.

Waters said the effort not only provided jobs, but also helped areas hard hit by foreclosures fight blight that drags down property values. President Obama's budget office said that "with many communities still struggling with the impact of the severe decline in the housing market," the program remained important to the nation's economic recovery

California, which has received about $850 million under the program, stands to lose an additional $150 million.

Republican Rep. Gary Miller of Diamond Bar led the effort to terminate the program. He said it had become a "government giveaway" that allowed lenders and real estate speculators to offload foreclosed properties onto the taxpayers.

"This is exactly why I came to Congress," said freshman Rep. Michael Grimm (R-N.Y.). "We must stop the out-of-control reckless spending, and this is exactly where we need to start.... Let's stop and remember that the answer to everything is not the government."

Critics have complained about how the money has been divvied up, contending that big cities like Los Angeles have received more than their fair share. San Bernardino County officials, for example, have said that they have been shortchanged, given the magnitude of their foreclosure problem.

Los Angeles Mayor Antonio Villaraigosa said the program had played a "critical role in stabilizing our fragile housing market," even though the 1,500 properties that will be fixed up with money already allocated to the city was a fraction of the 39,000 foreclosed properties in Los Angeles over the last four years. If the program is continued, Los Angeles will receive an additional $10 million to target properties in South-Central and the northeast San Fernando Valley.

The effort to dismantle the program was personal for Waters, who regards it as one of her top achievements, created over the opposition of then-President George W. Bush.

Waters, a senior member of the House Financial Services Committee, included the program in a broader housing bill that Bush was eager to sign. After he dropped a veto threat, Waters said, it was the first time she ever thanked Bush for anything.

richard.simon@latimes.com

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