Family income level stagnates. Empty houses rile homeless advocates

The white brick house with mouse-gray chimneys sits on Marion Street in an inner-city neighborhood here. Unoccupied and unassuming, its quiet exterior masks a furor surrounding it: The federally owned foreclosed home is the target of a protest by local activists who want the United States Department of Housing and Urban Development to make it available to the homeless. (Profile of the homeless, Page 3.)

The dispute points up what is emerging as a major rift between the federal government and homeless advocates over thousands of vacant houses across the country.

Under a 1987 law, federal agencies are required to review their stock of underutilized properties to determine which might be transferred to nonprofit groups providing service to the homeless.

Homeless advocates say the agencies are not doing enough. This week they won a temporary court order blocking HUD from selling any foreclosed single-family homes to the general public.

Another suit is expected to be filed within the next few days against four federal agencies - HUD, the General Services Administration, the Veterans Administration, and the US Department of Health and Human Services - to try to get them to open up more housing for the homeless. ``They're clearly defying Congress,'' says Robert Hayes, counsel to the National Coalition for the Homeless.

HUD officials deny that they are being recalcitrant in aiding the homeless. They say the agency encourages its field personnel to notify shelter providers when properties are available. Some 242 properties have been leased to homeless families in the last three years. The agency has an inventory of 47,000 foreclosed homes.

Agency officials argue that most of the properties acquired through Federal Housing Administration (FHA) foreclosures are not ``surplus'' and thus not required to be turned over under the 1987 legislation. They warn that if the suit to stop them from selling foreclosed properties prevails, it could bankrupt the fund used to guarantee the mortgages of low- and moderate-income home buyers.

Whatever the outcome of the court suits, the wrangling over use of federal properties for the homeless is likely to intensify as cold weather approaches and election-year politics heats up.

Even in areas where some foreclosed homes are being turned over, rifts are emerging. Homeless advocates complain about the terms under which the government is leasing them houses, while some residents say the homeless are getting an unfair break.

Perhaps nowhere are the complexities and conflicts surrounding the issue more accentuated than in this Rocky Mountain hub. Denver, with its economy still in a half nelson, has a sizable homeless population (2,500) and one of the country's highest foreclosure rates.

``It has put us in the role of testing the waters,'' says John Parvensky of the Colorado Coalition for the Homeless.

HUD has become the area's largest holder of real estate, with some 5,600 houses in its inventory as a result of owners defaulting on government-backed loans.

Homeless advocacy groups want more of this stock. Most visible has been Dorothy King, a fiery operator of a shelter for battered and homeless women here. She, and a group of homeless women and children, recently occupied the vacant house on Marion Street. Ms. King was subsequently arrested but continues to agitate to get HUD to sell her group the home for a small amount, or lease it to her and pay the maintenance.

HUD officials say they cannot set the precedent of selling the $73,000 home for a nominal fee. The agency has turned over 21 condominiums, houses, and other single-family dwellings to shelter providers in the past few years. In part because of the attention over King's protest, however, the agency has agreed to open up 55 more foreclosed homes.

Still, differences persist. HUD leases the properties to the nonprofit groups for $1 per year, though the agencies have to pick up the tab for the taxes, maintenance, and insurance. Mr. Parvensky says that can add up to $150 - too much in many cases for his group.

HUD officials here acknowledge that the costs can be prohibitive for some groups. But the agency, which is already putting out $30 million year for maintenance on foreclosed homes in the Denver area, says it can't continue to pay those costs.

``That would be a tremendous drain on the insurance fund if we did that,'' says Cindy Valentine, a HUD official here, referring to the FHA fund for federally insured mortgage reimbursements.

There have also been complaints by shelter groups over how far they have to go in obtaining letters of community support before the homeless can move in.

If HUD has been squeezed by homeless advocacy groups, it has also been hearing from Denver homeowners. Some say they don't want homeless families living next door, while others worry about what effect their new neighbors and the bargain-basement buys and leases they get will have on their property values.

``They have deluged us with objections,'' says Ms. Valentine, who notes that there were no complaints prior to the latest round of publicity.