The restoration of REO homes for sale in Sacramento has been audited by the inspector general of the federal Housing and Urban Development Department, and the results require the Sacramento Housing and Redevelopment Agency to look more closely into how it has been spending its federal stimulus funds.
The HUD auditors said that the SHRA was supposed to buy foreclosure houses in neighborhoods hardest hit by the crisis, but the local agency instead spent over $1.1 million in making expensive repairs on properties that were not foreclosed or abandoned at the time frame specified by HUD.
In addition, the SHRA also allowed the contractor, EPO Development, to spend for expensive and unnecessary upgrades on 16 multifamily properties at Lerwick Road and at Arcade Circle. The auditors claimed that the developer earned 20 percent from the multifamily contract, much higher than the average earned by other contractors for similar projects, which is around 9.6 percent.
The money spent on the EPO contract was part of the $18.6 million allocated to Sacramento County to rehabilitate REO homes for sale or abandoned houses under the Neighborhood Stabilization Program. All in all, the SHRA allocated $3.8 million that could have been spent on more pressing projects.
Based on recent reports from a major research firm, foreclosure filings in Sacramento area declined in May, but the rate of mortgage defaults increased and the number of foreclosed homes available for people in Sacramento foreclosure investing is still high.
On one popular real estate site, there are currently 22,434 foreclosed properties for sale, with the two properties on its front page priced at $136,947 and $115,474, far below the current average price in the area which is around $193,000.
Investors can also still find cheap houses in California as the state still posted the highest number of foreclosure cases in May. Of the more than 72,000 homes that were notified of foreclosure in May, almost 16,000 were REO homes for sale.