A fix-up plan for L.A. foreclosures

For years, Daniel Lubiano tended the roses in his front yard while watching the home across 82nd Street in South Los Angeles fall apart.

In foreclosure for nearly a year, the house had been neglected by tenants who refused to pay their rent. The stucco was chipped and dirty, and the yard was covered in weeds.

The empty carport behind the house became a favorite spot for teenagers trying to hang pairs of tennis shoes from electrical wires overhead. In all, there were 28 pairs dangling there.

“We spend a lot of time trying to make our house look nice,” said Lubiano, a 30-year-old mechanic. “It would be nice if we had people move in who really wanted to take care of the place.”

That’s exactly what federal and city officials are hoping.

Newly appointed federal Housing Secretary Shaun Donovan on Wednesday toured the home, and another on 90th Street, to gauge the depth of the housing problem in California, where more than a quarter of the nation’s foreclosures have occurred.

Donovan was in Los Angeles to tour some of the homes the city is buying with its share of the $6 billion in federal money being given to local governments to buy foreclosures under the Neighborhood Stabilization Program. He was joined by Mayor Antonio Villaraigosa and Rep. Maxine Waters (D-Los Angeles), who wrote the bill that created the program.

The city intends to use its $33-million piece of that money to turn some of the homes into low-income rental housing. Others it will refurbish and sell to low-income and moderate-income families.

“We want to bring real families into these neighborhoods, not more investors,” said Mercedes Marquez, the head of the city’s housing agency.

Donovan, the former head of New York’s housing agency, said he believed the city was off to a promising start and that he hoped to change the way the Department of Housing and Urban Development deals with local housing offices.

“When was the last time you came to HUD and said we have a problem and we want you to help us solve it?” Donovan asked. “HUD has not been that kind of partner, and we want to do that now.”

The aim of the federal effort is to reduce blight and add affordable housing. There has been some grumbling among housing programs about the formula that was used for the funding allocation, with some agencies saying that big cities like Los Angeles and Cleveland gobbled up more than their fair share. Some real estate brokers and private investors also have been critical of the program, saying it could force prices down even further.

The funding itself is a small dose of medicine for a massive problem. Los Angeles saw more than 21,000 foreclosures in 2007 and 2008, and many of them are still on the market. Even if it spent every cent of its funding on buying homes and bought them at an average price of $100,000, the city would be able to buy only 330 homes.

On 82nd, across the street from Lubiano, the duplex the city is buying went into foreclosure in June 2008.

Anthony Chatman, the real estate broker hired by the bank, wasn’t able to put it on the market, though, because the renters had stopped making payments but refused to leave. They were evicted in February.

Their landlord bought the home for $470,000 in August 2006 with 100% financing at a variable interest rate from Washington Mutual Inc. The home had sold just five years earlier for $60,000. Chatman was planning on listing the home for $179,000 in March when he was contacted by the city. They are still negotiating a sale price, he said.

City officials have been working with Wells Fargo & Co., which is managing the loan on the house, to find properties and make bids on them, Marquez said. The homes will be bought through a nonprofit agency the city has set up with Maryland-based Enterprise Community Partners, one of the country’s largest low-income housing developers.

Inside, the duplex looked as if it had never seen a vacuum cleaner. In the larger of the two units, the once-aquamarine carpet was now mostly tarry black and brown, covered in part by an equally stained rug showing the signs of the zodiac.

Despite bars on every window and door, the house had been broken into in recent weeks, the heaters ripped from the walls. Next door, another bank-owned property was covered in gang graffiti.

Up the street, Ana Ruiz, 33, said she hoped the city would bring in enough new owners to make a difference. She said she feared for her safety and that of her two daughters because the neighborhood had become a magnet for crime.

“At night this place is pretty scary,” Ruiz said in Spanish. “We have the police coming and the helicopters coming. . . . Unless something changes, I am going to move.”

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william.heisel@latimes.com

Times researcher Scott Wilson contributed to this report.