Gray seeks probe into loan program

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By Michael Drost

D.C. Council Chairman Vincent C. Gray is seeking an investigation into why the Greater Washington Urban League this week shut down a first-time home buyers assistance program that it operated.

The Urban League reportedly told participants Monday — including some who had loan approval and were scheduled for closing within a week — that council budget cuts ended the program. But Mr. Gray insists that the organization had explicit instructions from the D.C. Department of Housing and Community Development not to cancel loans that were already approved.

The Urban League has an $8 million city contract to run the Home Purchase Assistance Program, which provides up to $77,000 in down payment and closing cost assistance to low- and moderate-income first-time home buyers.

About 125 loans have been approved under the program since Sept. 30. It was not known how many of those were affected by the shutdown. Last year, contracts were approved for more than 500 home buyers.

"I cannot understand why the Urban League chose to block ... participants with approved purchase contracts from proceeding to closing and settlement. This decision has created extreme personal distress for [those] who were about to realize the dream of home ownership," Mr. Gray wrote in a letter to the D.C. auditor on Thursday. Mr. Gray asked the auditor begin a probe immediately.

Urban League President and Chief Executive Officer Maudine R. Cooper responded with a statement that the League is "more than glad to cooperate" with Mr. Gray and that she feels the term "investigation" is inappropriate.

"It is my understanding that Chairman Gray is trying to ascertain the exact monies available for the home buyer program. We believe we have been doing an outstanding job in implementing this program," she said.

City officials are attempting to tamp down the controversy.

"We're aware of Chairman Gray's concerns, and we're working very closely with the [housing department] to make sure these issues are resolved. We're confident that this will issue will be solved very quickly," economic planning and development office spokesman Sean Madigan said Friday.

Reached by phone Friday evening, Mr. Gray said the investigation needs to be completed quickly so that the program participants can get their homes. "The first step is to make sure we get the record straight and to ensure that these contracts are honored," he said.

According to information provided to The Washington Times by Mr. Gray's office, the approved 2009 budget for the program was about $34 million. About $11 million was frozen until February as part of a budget gap closing plan approved by the council on Nov. 10.

Mr. Gray said the council did not expect the freeze to affect home buyers with approved loans.

"We knew that there was more than enough money available to fund approved contracts," he said.

Because of the freeze, housing Director Leila Edmonds wrote to the Urban League on Nov. 14 that the program should be suspended Monday and that after further evaluation, it "would be significantly scaled back." However, her letter directed the Urban League to proceed with closing and settlements for those who had loans approved as of Nov. 14.

In a Thursday letter to Mayor Adrian M. Fenty, a Democrat, Mr. Gray reported that by Monday his office had received "nearly 40 phone calls from confused and distraught ... participants" that had been told by the Urban League that it were ending the program because the council "had cut all of the funding."

Mr. Gray also wrote that it is "inconceivable" that the Urban League had spent the $23 million in available funds just two months into fiscal 2009.

Miss Cooper said that her organization was instructed to suspend activities for applicants after Nov. 17. But she did not say whether the League had told those with approved loans they could not proceed to settlement.

"We understand the council's concerns about fiscal responsibility. Hopefully, this matter will be resolved expeditiously," she said.