Attila the HUD

Housing and Urban Development had a perfectly good program providing homes to Maine's poor. What did they do with it? They kicked out their nonprofit partners and left low-income families to fend for themselves.

by Sam Smith

In May of 1994 Cathy Bishop's life quickly fell to pieces. In the span of three months that spring Bishop's husband left her, she lost her job, and she lost her house in South Portland. Before she knew what hit her, Bishop and her two-year-old daughter, Rae-Lynn, who is legally blind, found themselves in the Salvation Army homeless shelter on Chestnut Street.

"I couldn't believe it," she says. "This wasn't what was supposed to happen."

Today, sitting on the coach in her two-bedroom bungalow on Front Street with more Barbie dolls scattered around than Rae-Lynn could ever find time to play with, Bishop calls herself lucky. "I had a lot of people help along the way," she says. Bishop is now the office manager with Employment Trust in Portland, and she bought this house in March with the help of Portland-based PROP, People's Regional Opportunity Program, and a service offered through the Department of Housing and Urban Development that allows nonprofits like PROP to purchase homes on which HUD has foreclosed. The program also allows these nonprofits to assist in securing loans. "I couldn't have gotten a loan from a bank if it wasn't for that [program]," says Bishop. "I wouldn't have a house. Rae-Lynn wouldn't have a backyard to play in."

Bishop isn't alone. In the last three years PROP has made 10 homes available to low-income families through the HUD program. Combined with the 13 other Maine nonprofits involved in the program, approximately 70 houses have moved into the hands of low-income families over the past three years.

As Grant Lee, executive director of PROP, says, "It's a good program. It works."

Only problem? Bishop's home was the last PROP was able to purchase through the HUD program before they were kicked out this month. Actually, Bishop's was the last home purchased by a nonprofit in the state through the HUD program before they were all suspended. Right now, in Maine, homes that HUD forecloses on are going to the highest bidder. Low-income families will have to fend for themselves.

Mary Bouvier, PROP's housing director, says she began to get suspicious about HUD's commitment to nonprofits last year, in April. In an attempt to make the selling of HUD-foreclosed homes more efficient, the management and marketing responsibilities of the program had been contracted out to the private sector. That announcement was made in March of 1999, and in April Bouvier went to New Hampshire for a training session with Citiwest Properties Inc., the Arizona-based company that had won the contract to manage HUD homes in New England.

At the meeting, Citiwest told Bouvier that some changes were going to be made. Primary among them, as far as PROP was concerned, was that the 30 percent discount PROP had enjoyed in purchasing HUD-foreclosed homes in Cumberland County was now only good within two zip codes, 04101 and 04102. Bouvier and others in Maine soon learned what other changes were in store.

"When a home is repossessed and acquired by HUD, a price is given to it," explains George Bates, housing director with Kennebec Valley Community Action Program in Waterville. "But they may not be aware that the furnace is getting ready to go, or something like that. We have people that go in and inspect the house. With the local HUD office, we could go to them and say, `Listen, you're asking this much, but it's worth this much.' We'd negotiate. Citiwest doesn't negotiate. We used to get prior notice [of available homes] from HUD. We certainly don't get it from Citiwest.

"Prior to HUD subcontracting out to Citiwest we'd gotten over 25 houses in three years all to low-income people. Since the change to Citiwest we haven't purchased one house."

Stephen Mooers, director of housing services with the Bangor-based nonprofit Penquis, has had the same problems with Citiwest and the same decrease in purchases (10 homes in the two years prior to Citiwest taking over, none in the past year). As he puts it, "The Citiwest people are morons, and the worst kind of morons: they are impolite morons. They don't care. Everybody is having trouble with them."

Pam Bright in Citiwest's Connecticut office said any questions about its HUD contract or its performance in New England must be directed to HUD's DC office.

HUD spokesperson Lamar Wooley out of DC says purchases from nonprofits have actually gone up since Citiwest took over (he was neither shown any figures to back this up nor could he provide any for this article). Calls to the nonprofits in Maine who dealt with Citiwest over the past year reflect otherwise. Out of the 13 participating in the program, only two have purchased homes from Citiwest. Each bought one.

A hearing before the House Government Reform Committee last November looking into the performance of all the HUD subcontractors also reflected poorly on Citiwest's performance and called into question the need for the subcontracting at all. An assistant inspector general for audit with HUD stated that the cost effectiveness of subcontracting out to Citiwest and others was never studied, and that evaluation of "basic business decisions before executing these contracts" was never conducted. One subcontractor, Intown Management Group, which was awarded contracts comprising 40 percent of HUD-foreclosed homes in the country, had its contract terminated for poor performance. Citiwest was shown to be moving houses at a rate much lower than local HUD offices had been moving them, mainly because properties were not being repaired after foreclosure.

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Sam Smith can be reached at ssmith@phx.com.