$58 million sought for flood victims, affordable housing

Joined by state Democrats and housing activists, Gov. Christine Gregoire on Monday proposed spending nearly $58 million to increase the state's inventory of affordable housing and help victims of the recent floods rebuild.

The proposed package, which will be considered when the state Legislature convenes next month, also would provide financial-counseling services and programs aimed at curtailing mortgage fraud and helping homeowners avoid foreclosure.

The floods that devastated communities across Southwest Washington earlier this month served as "a rude reminder" of how precarious a family's housing situation can be — and how important a home is to a family's sense of security, Gregoire said.

At a news conference Monday in White Center — King County's poorest neighborhood — Gregoire; Senate Majority Leader Lisa Brown, D-Spokane; House Speaker Frank Chopp, D-Seattle; and Sen. Claudia Kauffman, D-Kent, unveiled what they called a housing-security plan.

It would add $7.5 million to the state operating budget. Of that, $1.5 million would pay for mortgage-crisis counseling and homeownership-education programs, with the rest going to the Washington Families Fund.

The fund uses public money to leverage philanthropic donations to create affordable housing and provide such services as drug treatment, domestic-violence counseling and child care to help people move out of homelessness.

Since 2004, Boeing, the Windermere Foundation and other private foundations have given money that's been matched by the state, totaling more than $11.5 million.

The Washington Families Fund is a national model of collaboration between the public and private sectors, said Bill Gates Sr., representing the Bill & Melinda Gates Foundation, which has given $4 million to the fund since 2004.

An additional $50 million would be added to the state Housing Trust Fund, bringing the fund's total to approximately $180 million.

Of that, $10 million would go to help families who were hit hardest by the recent floods to repair and rebuild. An additional $3 million would be available so nonprofit organizations and housing authorities could buy property.

The property-acquisition program is "still under design," said Kari Burrell, the governor's executive-policy director. But the goal, she said, is to help nonprofits quickly buy property when it comes on the market to preserve affordable housing and mobile-home parks.

Gregoire also said the proposal seeks to ban deferred-interest options for subprime loans and eliminate prepayment penalties that kick in when a loan is paid off within a certain time period, typically three years after it's sold.

Under the proposal, mortgage fraud would be a felony, and anyone involved in mortgage-lending scams also would be subject to greater civil penalties, the governor said.

Sara Jean Green: 206-515-5654 or sgreen@seattletimes.com