Attila the HUD, continued

by Sam Smith

PROP purchased nine houses in the first two years it was in the HUD program. The only home PROP has purchased since Citiwest took over was Bishop's. Bouvier says PROP has not been given prior notification of properties coming on the market and are not able to negotiate for rehabilitation costs.

The outcome of this, says Lee of PROP, is that nonprofits have been buying fewer homes and putting fewer low-income families in homes.

"Private interests are getting what were once government subsidized houses," says Lee. "HUD has built up equity in these houses and now they're going to private interests. We're losing. Citiwest is impossible to work with."

But for nonprofits in Maine, the chance to work with Citiwest is over.

HUD has been criticized by both the public and private sector for a lack of responsiveness to its constituents and its cumbersome bureaucracy (simply trying to find someone at HUD to discuss the issue of home sales to nonprofits can be an all-day affair). HUD's shortcomings were brought home to the folks at the PROP offices on April 18 of this year.

PROP received a letter from the HUD office in Philadelphia stating it was time to recertify for the foreclosed-home-buying program. This was nothing new; recertification takes place every year. What was different this time around was the size of the envelope in which the recertification forms were held -- nearly two inches thick with over 200 pages worth of forms. In years past there's been one form to fill out.

But that wasn't all.

The cover letter stated that PROP had 45 days from the date of the letter to have the forms returned. The letter was dated March 3. PROP received it April 18 -- 46 days after it was dated.

Other nonprofits in Maine had it slightly better. Penquis had three days to fill out the forms. Community Concepts, serving Androscoggin and Oxford counties, had one day. None of the nonprofits in the state were given more than a week to fill out the stack of papers.

"It was absurd," says Wes Riley, housing and energy director with the York County Community Action Corporation. "We didn't have time to compile everything they were asking for, but we filled out as much as we could and sent it in. We knew they'd respond and say, `This is what else we need.' "

Which they did.

"We got the letter back," continues Riley, "and what they were asking for was crazy. Detailed information on our board members, their social security numbers, where they work, they said our board mission statement didn't line up with what they were looking for. It was absurd. So we didn't respond. They were asking for more than we thought was practical. A few weeks later we got a letter that said we'd been taken out of the program."

"It was ludicrous," says Mooers with Penquis, who went through the same process as Riley in York County. "We've used the same 501(c)(3) [designating an organization as nonprofit] since we were incorporated over 20 years ago. We get the letter back from HUD saying we need an updated 501(c)(3). Well, that form is fine for Maine State Housing, for the Bank of Boston where we get federal loans; for all the other state and federal programs we're involved in this form is fine. Now all the sudden it needs to be updated?"

As of June 1, Penquis was out.

HUD informed the Kennebec Valley Community Action Program that to remain certified they would have to let go of one of the organization's board members who had purchased a home through the HUD program.

"We are required by charter to have one-third of our board be low-income clients," says George Bates with KV CAP. "We want to make sure we're serving them properly, so they're on the board. About a year and a half ago, one of them purchased a [HUD-foreclosed] house. They said he needed to resign. We said we couldn't comply with that. So as of June 22 we're out of the program."

This scenario played out across the state until all the nonprofits in the program were out. (Coastal Enterprises in Wiscasset received a letter saying their information was incomplete. More information has been supplied and they have not been informed yet of their status.)

Beth Eilers, housing program specialist in HUD's Philadelphia office, says the more detailed certification process this year was done to protect HUD.

"We want to make sure the nonprofits are qualified," she says. "We want to make sure they have the backing and staff to finish work on these homes. We want to make sure that if they are buying these homes at a discount that they are passing that discount along.

"A lot of nonprofits don't like that they have to fill out these forms," she continues. "But we have to protect HUD. We have to cut down on any kind of fraud out there. If they don't feel they can fill out these forms, maybe they don't have the qualifications for the program."

Loren Cole, senior community builder in HUD's Bangor office (which has a reputation among the nonprofit sector of responsiveness), says he plans to get the list of groups who have been dropped from the program. He plans to contact them and "do whatever I can to help them get back into the program."

Lee at PROP has enlisted the services of Maine's congressional delegation to look into the recertification process and Citiwest's performance.

The majority of the nonprofits who were in the program, however, are saying good riddance. A year of dealing with Citiwest and now this cumbersome recertification is too much. "If they wanted to intentionally get us out of the program," says Riley in York County, "they couldn't have come up with a better way to do it."

Moores with Penquis says his organization will look for other opportunities outside HUD to help low-income families into homes. In a letter to HUD explaining his frustration with the deterioration of the program he summed up his feelings this way: "HUD does not lose, Penquis does not lose, but maybe the folks you and I are paid to represent will."

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