Julie Staradumsky CREN

SECRETARY DONOVAN ANNOUNCES $360 MILLION IN RECOVERY ACT GRANTS TO SUPPORT COMMUNITY AND ECONOMIC DEVELOPMENT NATIONWIDE
First rounds of awards made under the Recovery CDBG program will revitalize neighborhoods and create jobs across the country

WASHINGTON - In the Obama Administration's continued effort to stimulate community development and job growth, U.S. Housing and Urban Development Secretary Shaun Donovan today announced nearly 700 grants totaling $360 million in funding through the American Recovery and Reinvestment Act of 2009 (Recovery Act). To view the list of grantees receiving funding under this round of grants, visit HUD's Recovery Act website.

The grants awarded today represent over half of the Recovery Act-funded grants available through the Community Development Block Grant (CDBG) Program, which primarily benefit low- to moderate-income families. CDBG enables state and local governments to undertake a wide range of activities intended to create suitable living environments, provide affordable housing and create economic opportunities. Under the Recovery Act, recipients give priority to responsible projects that can award contracts through a bidding process within 120 days of the grant agreement. A total of $1 billion will be awarded nationwide by HUD in Recovery Act Community Development Block Grants.

"Today, we make another critical investment in the economic recovery of our communities," said Donovan. "I am proud to announce this $360 million in Community Development Block Grant funding to state and local governments throughout the country, which will create jobs and help to revitalize the nation's hardest hit neighborhoods. President Obama and I are anxious to put this money to work for long-term, sustainable community and economic development."

President Obama directed all Recovery Act funding to be spent responsibly and in a transparent manner in order to provide a necessary economic boost, create jobs, and strengthen America's middle class. In a letter to CDBG recipients of Recovery Act funds, Donovan wrote, "In accepting these funds, it is imperative that you be good stewards of these precious taxpayer dollars by focusing your efforts on the Recovery Act goals of investing in infrastructure that will create or sustain jobs in the near-term and generate maximum economic benefits in the long-term."

Since 1974, CDBG has provided more than $127 billion to state and local governments to target their own community development priorities. The rehabilitation of affordable housing and the construction and improvement of public facilities have traditionally been the largest uses of CDBG funds although the program is also an important catalyst for job growth and business opportunities. Annual CDBG funds are distributed to communities according to statutory formulas based on population, poverty, pre-1940 housing stock, growth lag, and housing overcrowding.

HUD is committed to implementing Recovery Act investments swiftly and effectively as they generate tens of thousands of jobs, modernize homes to make them energy efficient, and help the families and communities hardest hit by the economic crisis. The Recovery Act includes $13.61 billion for projects and programs administered by HUD, nearly 75 percent of which was allocated to state and local recipients only eight days after President Obama signed the Act into law. The CDBG funding was among the 75 percent that was allocated during that time. Now as grant recipients' spending plans are approved, HUD is officially making funding available to spend. The remaining 25 percent of HUD Recovery Act funds will be awarded through a competitive process in the coming weeks and months.

In addition, Secretary Donovan and the Department are committed to providing the highest level of transparency possible as Recovery Act funds are administered. It is vitally important that the American people are fully aware of how their tax dollars are being spent and can hold their federal leaders accountable. Every dollar of Recovery Act funds HUD spends can be reviewed and tracked at HUD's Recovery Act website. The full text of HUD's funding notices and tracking of future performance of these grants is also available at HUD's Recovery Act website.

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HUD is the nation's housing agency committed to sustaining homeownership; creating affordable housing opportunities for low-income Americans; and supporting the homeless, elderly, people with disabilities and people living with AIDS. The Department also promotes economic and community development and enforces the nation's fair housing laws. More information about HUD and its programs is available on the Internet at www.hud.gov and espanol.hud.gov.

Entrepreneurs don't retire, they just find a new project.

Over the past decade, baby boomers produced a high rate of entrepreneurial activity, and Dan Stangler, senior analyst at the Kauffman Foundation, says the number of baby boomers starting a business in their traditional retirement years is likely to increase.

In response to that analysis, U.S. News & World Report identified 10 places that it says are the best places for an entrepreneurial baby boomer to retire. It picked the areas because they have an affordable cost of living, proximity to healthcare, fun recreational amenities, and access to information, particularly colleges and university with technology-focused departments.

Here are their 10 best suggestions:

1. Arlington, Va.
2. Columbia, Md.
3. Fargo, N.D.
4. Fayetteville, Ark.
5. Fort Collins, Colo.
6. Knoxville, Tenn.
7. Lincoln, Neb.
8. Madison, Wis.
9. Round Rock, Tex.
10. West Des Moines, Iowa

Source: U.S. News & World Report, Emily Brandon (06/29/2009)

Mortgage insurer PMI Group predicts that home prices will fall through the first quarter of 2011 in about 30 of the country's 50 largest metropolitan areas.

"The housing market has been hit by a demand shock of high unemployment and a supply shock of distressed foreclosure sales," LaVaughn Henry, senior economist at PMI.

The areas PMI says have the highest probability of lower prices in 2011 are:

• Miami
• Fort Lauderdale
• West Palm Beach, Fla.
• Orlando
• Tampa, Fla.
• Jacksonville, Fla.
• Riverside, Calif.
• Los Angeles
• Santa Ana, Calif.
• Sacramento
• San Diego
• Las Vegas
• Phoenix
• Providence, R.I.
• Detroit

Cities with the lowest probability of falling prices are:

• Cleveland
• Pittsburgh
• Columbus, Ohio
• San Antonio
• Houston
• Dallas
• Fort Worth

Source: Bloomberg, Dan Levy (7/07/2009)

The Obama administration's $75 billion foreclosure prevention effort is unlikely to succeed because mortgage lenders cannot turn a profit on modified loans, concludes a new report by the Federal Reserve Bank of Boston.

Analyzing 665,410 loans originated between 2005 and 2007 that subsequently became seriously delinquent, the Boston Fed found that only 3 percent of borrowers had their loans modified to lower monthly payments, and about 5.5 percent received workouts that did not result in lower payments.

Also, up to 45 percent of approximately 150,000 borrowers who received some kind of aid ended up in arrears again, but about 30 percent of delinquent borrowers were able to fix their problems without help from their lenders.

Source: Boston Globe, Jenifer McKim (07/07/2009)

Some housing experts say the next logical step for helping home owners with negative equity is loan forgiveness.

Home owners with no equity stake and no likelihood of having one anytime soon are increasingly likely to walk away. Some theorize that curbing that trend is the only thing that will stabilize the market.

The nonprofit Milken Institute has devised a plan that would use Fannie Mae to refinance underwater loans with government money. Under the plan, a private lender would provide the money for the value of the home and the U.S. Treasury would issue a second, interest-only loan for the portion of the current mortgage that is underwater. Every year the home owner keeps current with payments, the Treasury would forgive a portion of the loan.

The institute estimates that this would save 1.5 million homes from foreclosure or abandonment and cost taxpayers between $75 billion and $100 billion.

Ken Rosen, chairman of the Fisher Center for Real Estate and Urban Economics at UC Berkeley, approves that plan, but urges returning some of the appreciation to the original lender as a reward for patience.

"The idea that these loans are worth face value is a fiction," says Richard Green, director of the USC Lusk Center for Real Estate. "If we don't deal with [reducing] the balances, we're not really dealing with the problem."

Source: Los Angeles Times, Tom Petruno (06/27/2009)