ROANOKE TIMES
Copyright (c) 1996, Roanoke Times
DATE: Friday, December 6, 1996 TAG: 9612060013
SECTION: NATIONAL/INTERNATIONAL PAGE: A-6 EDITION: METRO
DATELINE: WASHINGTON
SOURCE: Associated Press
A government program to give the poor a roof over their heads is so riddled with problems that well-off people lived in houses meant for homeless families and low-income home buyers were bilked by government-approved middlemen, documents show.
Under the ``Homes for Homeless'' program, the Department of Housing and Urban Development leases houses whose owners have defaulted on federally guaranteed loans. The houses are made available for just $1 a year to nonprofit organizations that work with the homeless.
The aim is to provide cheap, temporary housing for people trying to get back on their feet.
But some HUD offices have done such a poor job of monitoring the groups that many have abused the program, letting friends, relatives or others live in the houses, according to internal HUD investigative documents and audits obtained by The Associated Press.
``It's just too easy to cheat,'' said Michael Beard, inspector general for HUD's Southwestern district. ``We believe the program should be eliminated.''
The agency is not ready to scrap the program. But under pressure from Congress, it said last month that no new leases would be issued as of Jan. 1. HUD will decide next year whether to end the program, said Jacquie Lawing, deputy assistant secretary.
More than 300 organizations - mainly privately funded homeless coalitions and community service groups - hold leases on 1,289 of the homes around the country.
HUD acquired the properties through foreclosures of government-guaranteed home loans. The program receives no direct funding, although the department absorbs the cost of leasing the homes, which would otherwise be sold.
In Baton Rouge, La., HUD auditors found only one homeless person among the 43 tenants it reviewed among 108 leases held by the nonprofit group Safety Net Inc.
Expensive cars were parked in front of houses that contained nice furniture and big screen televisions, documents show. Tenants were later found to be friends and business associates of the group's director. One tenant earned $58,000 a year and paid no rent, according to Beard and local newspaper reports.
HUD knew as far back as 1990 that some of the Safety Net tenants were not homeless. It told the group to stop the practice, but continued leasing it more properties and failed to monitor the group to see if the problems had been corrected.
It finally terminated Safety Net's leases and kicked the group out of the program following local press reports earlier this year.
HUD doesn't have enough staff to make sure that groups rent only to homeless people, officials say.
``We don't manage the nonprofits, we manage the properties,'' said Tony Hernandez, HUD's top official in Denver.
To get into the program, created in 1990, nonprofits need to show they have adequate funding to keep up the properties and provide support services to help families get on their feet.
The groups sign agreements to house only people who have been living in shelters, have very low incomes or face eviction.
HUD inspects the houses once a year for maintenance and damage and periodically checks the groups' tenant and financial records.
Pamela Martin, executive director of a Phoenix nonprofit that HUD accused of leasing to ineligible tenants, says renters who eventually find work often may earn more than the program allows.
``You don't kick them out right away,'' Martin said. ``We look at their financial situation and give them 30 to 60 days.''
Lawing said tighter rules are making it harder for cheaters. Groups now get two-year leases, down from five, and are examined before they get any new properties. The agency also put a cap on how many houses each HUD office could lease. The changes have led to fewer problems, she said.
The $1 leasing program is a small part of HUD's $1 billion effort to assist homeless families.
Rep. Spencer Bachus, R-Ala., who led hearings on the program in August, said the program should be scrapped: ``It attracts charlatans. It's laughable. It ought to be discontinued.''
LENGTH: Medium: 81 linesby CNB