HUD Loans in St. Louis County
The St. Louis Post Dispatch wrote today in a critical manner that St.Louis County had not utilized some $24 million in HUD loans intended to help distressed areas. These loans commonly referred to as 108 loans from the section of the housing act they fall under are part of HUD’s Community Development Program. HUD has threatened to pull back the funding if the money is not used.
It is not quite fair to be too critical of the county in this regard. First, the interest rates on the funds are only 1% lower than market and contain much more paperwork. Second, they do not work well on small projects such as housing rehab. The county needs to come up with one or two big projects for their utilization. Third they are loans not grants and the borrowers must be creditworthy. Finally, these loans are borrowed against future block grant funding, and in fact reduce the future funding by the amount of the loan.
The county had request a waiver for use of the funds and has not received an answer from HUD despite repeated requests for a decision. This whole thing smacks of HUD covering their collective asses. Written by Paul Dribin