Border Areas Need Infusion of Capital

Mortgage & Real Estate

A multi-agency effort targeting some of the worst housing in the country is a welcome move, but only a start.

The key component of the effort by the Departments of Housing and Urban Development, Agriculture and Treasury is a grant of up to $200,000 apiece to focus on affordable housing and small business initiatives. A NOFA (notice of funding availability) will be posted sometime this summer. The total amount of money available from this program won’t be known until then.

Groups eligible for the money include community development lenders and investors.

Housing in the “colonias” areas of the United States border with Mexico (in the states of Texas, New Mexico, Arizona and California) has to be seen to be believed. It is far worse than housing in urban ghetto areas and even worse than that on many American Indian reservations.

The colonias tend to be in rural areas or in exurban rings near big cities, like El Paso. They are far too easy to overlook, and often need a crisis, like them contaminating a nearby city’s water supply, before attention is paid.

What colonias are are illegal developments, often without water or sewage hookups, divided into lots by unscrupulous developers. The largely Hispanic residents of the colonias, mostly American citizens, bring with them the Mexican cultural propensity to buy land.

The loans aren’t really mortgages, as even one missed payment will trigger a default. Often, the family will spend all its available capital on the lot and have little or no money left for the house. So the houses tend to be ramshackle affairs using leftover construction materials, tarpaper and wood from loading skids.

Add to the misery of these awful houses the health menace of bad water and sewer systems and the colonias become potent breeding grounds for diseases not common any more in industrialized societies. Instances of bubonic plague, for instance, have been found in colonias.

Mortgage finance would be a net plus in these areas, but many if not most are not ready for it. What’s really needed is infrastructure and construction money.

The $200,000 maximum grants will be made by HUD. Treasury’s CDFI Fund (community development financial institutions) will provide technical assistance, webinars and training. Agriculture’s Rural Development agency plans to support agricultural production in these areas.

It’s time to revamp these horrible places that have no real place in America.

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