Learn How To Start Investing In Real Estate
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HUD To Remove Offices From Distressed Neighborhoods

Written by Than Merrill

Despite encouraging signs that the housing sector is in the midst of a recovery, several cities remain burdened by the wake of the latest bubble crisis. According to RealtyTrac’s latest foreclosure report, approximately one out of every 859 U.S homes has become the subject of a foreclosure filing. Trends reveal particular cities in which foreclosures have served to cripple economic recovery. Detroit and Tampa Bay serve as reminders that some cities still require the assistance of government programs to remain in tact.

However, it was recently reported that the U.S. Department of Housing and Urban Development (HUD) is planning on closing its doors in several geographical regions that are struggling significantly with foreclosures.

The federal housing department, which is responsible for providing emergency placement for the recently evicted and newly homeless, is slated to close several offices around the nation. As part of the agency’s plan to trim costs and ”create efficiencies,” 16 offices will be closing their doors for good within the next four months. Of particular concern, however, are the locations in which these offices are abandoning. Four of the offices that are scheduled to close are in eight cities with the highest rates of foreclosure.

“We need the boots on the ground in Tampa to help us deal with the housing crisis. Now is not the time to pull out,” said Sylvia Alvarez, executive director of the Housing and Education Alliance, a nonprofit group that helps people with housing issues in Tampa.

In a memo released by the HUD, the government agency acknowledged that the closures were “based on the needs of the Department.” Subsequently, there appears to be no need to maintain 80 separate field offices scattered across the United States when the majority of cases are handled over the phone or online. Only about 10 percent of their clients are considered “walk-ins.”

Contradictory to the beliefs of the HUD, are the opinions of nonprofit workers located in distressed neighborhoods. Those affiliated with nonprofits believe that HUD offices work as a clearing house for people who have lost their home and need a place to reside.

“When individuals show up on their door step, the HUD staff figures out what the problem is and directs them to the appropriate agency or group,” said Alvarez, whose group helps foreclosed homeowners sent her way by HUD’s Tampa staffers.

Those in opposition to the upcoming closures have voiced their opinion, questioning the motives of the HUD. Of particular concern is the distribution of available offices. Florida, a state in which 20 million residents call home, will have two HUD offices (Jacksonville and Miami). The two offices are all that will remain of the four that were once in place. In May, Florida cities claimed 10 of the top 25 highest numbers of foreclosure rates.  Removing two HUD offices will reduce the available assistance by 50 percent in a state that requires more attention.

By comparison, Tennessee will retain each of its three offices, even though it had no cities in the top 25 most troubled housing markets.

Union officials and nonprofit organizations recognize that the decision by the HUD to allocate their efforts elsewhere could not have come at a worse time. Communities struggling with high foreclosure rates are in desperate need of personal assistance. In other words, the exodus of HUD offices will leave those who need the most help with no one to talk to in person.

“Making a phone call is a lot harder than sitting down with someone and making some tough decisions on what you need,” said Liz McDargh, a national president with the National Federation of Federal Employees.

The recent consolidation, otherwise known as “sequestration,” is directly associated with federal budget cuts. The closure of the 16 HUD offices is in response to a White House executive order for several government entities to create efficiencies and reduce redundancies. As a result, estimated savings could be between $51 million and $65 million.  However, it remains to be seen how the removal of HUD offices from distressed neighborhoods will affect the economy in each respective state.