Federal money earmarked to help prevent foreclosures and assist underwater homeowners will instead be used to fund housing demolitions in a $100 million pilot project in five Michigan cities.
With the state's tens of thousands of abandoned homes attracting crime and lowering the value of nearby properties, the Michigan State Housing Development Authority and the state's elected officials have been encouraging U.S. Treasury officials to let Michigan "use federal funds aimed at keeping people in their homes to instead tear down derelict structures," writes Sarah Goodyear. "Yesterday, the feds finally agreed. Treasury officials released $100 million in money from the Troubled Asset Recovery Program, or TARP, to pay for a pilot demolition program in five Michigan cities: Detroit, Flint, Grand Rapids, Pontiac, and Saginaw."
"The money comes from TARP's $7.6 billion Hardest Hit Fund," notes Goodyear, "which covers 18 states and was designed to prevent foreclosures and keep unemployed or underemployed people in their homes, with measures such as helping with mortgage payments and getting underwater homeowners into more affordable mortgages by paying down principal."
"There is a certain irony in tearing down houses with funds marked to keep people in houses," she adds. "But Treasury's move in releasing the TARP money for demolition acknowledges that in some states, the road back to a stable housing market still has a long way to go, and individual states may need radically different solutions to get there."
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