PROVIDENCE — The city is expected to receive more than $9 million to stimulate investment and stabilize neighborhoods hardest hit by home foreclosures under a plan the state is submitting to the federal government on Monday.

But the city, which is working on legislation that would greater regulate foreclosure proceedings, is already urging the state for a greater share of the money.

The news comes as Providence is reporting 179 new foreclosure proceedings filed in October, the largest monthly increase in foreclosure filings this year. It brings the year-to-date total to 1,330, far surpassing the year-end foreclosure totals from 2006 (303) and 2007 (718).

“We’re seeing a second wave of foreclosures that has more to do with a breakdown in the economy and less to do with the behavior of lenders. It’s unemployment and job loss at the cause of it and not predatory lending practices,” says Mayor David N. Cicilline. “We are optimistic that we are potentially reaching the bottom of it and we will be seeing a slowing pace of foreclosures.”

The mayor’s administration has developed an $11.8-million plan that would affect a potential 400 units of housing, calling for $5.7 million of the federal money to go toward acquisition and rehabilitation of properties for low-income rental housing use, historic preservation or redevelopment in the city.

Another $3.2 million would go to demolishing, boarding or cleaning foreclosed properties and neighborhood infrastructure improvements, and $2.25 million would go to low-interest loans for homebuyers to make a down payment on a property or to start a rehabilitation project.

That was the plan the city recently forwarded to the state Office of Housing and Community Development as it was detailing for the federal government how it expected to spend a forthcoming $19.6-million federal grant, an amount that represents the state’s share of the $3.92-billion Neighborhood Stabilization Program. That money is to be made available in February to states by the Department of Housing and Urban Development.

But the state’s plan, available on the state Housing Resources Commission Web site ( www.hrc.ri.gov/NSP.php), calls for about $2.8 million less than the city’s request.

Providence would still receive more than half of the state’s total grant money, with Pawtucket ($2.4 million), Cranston ($1.2 million), Woonsocket ($1 million) and Central Falls (about $800,000) also taking in substantial sums. Other communities included in the grant are Cumberland, East Providence, Johnston, North Providence, Warwick and West Warwick.

What is unique about Providence’s allocation is the city administration is guaranteed a certain amount of the grant money available to its community.

“If the city uses up its $3 million and needs more, it can request more funds,” says Noreen Shawcross, executive director of the state Housing Resources Commission. “None of this is locked in. These amounts are clearly not enough to do what needs to be done.”

The Providence Redevelopment Agency will enjoy about a $300,000 direct investment and another $3 million available as reimbursement for some of the projects the city hoped to address in its original plan.

Other municipal governments must apply for the money that has been allocated for their community just as any for-profit developer, nonprofit agency or individual and be subject to approval from the state.

The city has sent a letter to the state requesting its full requested allocation. “The amount of money that comes to the city is the main concern. Whether it goes to the city [government] or [community development corporations] isn’t ... We work very closely with our CDCs and they do great work here,” Cicilline said.

Statewide, the Neighborhood Stabilization Plan would help a potential 445 units of housing on top of Cicilline’s proposed plan.

The state plan calls for $7.3 million to finance development projects, such as for-profit and nonprofit acquisitions and rehabilitations or government construction. Another $4.1 million would go to the state’s Land Bank, $3 million would be available for loans and counseling programs for homebuyers, and $1.7 million for state administration costs.

Meanwhile, the City Council is considering an ordinance amendment that would obligate mortgage lenders, prior to initiating foreclosure proceedings, to hold mediation sessions with borrowers at risk of losing their homes and to notify any rental tenants of its intent to foreclose on property.

Modeled after measures recently enacted in Philadelphia, the proposed law punishes lenders or mortgage holders that fail to follow the regulations by preventing them from filing deeds resulting from a foreclosure action and subjecting them to a $1,000 fine.

The ordinance amendment, which was submitted on Nov. 20 and has been referred to the Ordinance Committee, is not the first city law introduced this year seeking to address the foreclosure crisis.

In late June, the council approved an ordinance proposed by the mayor that imposes an annual tax of $10 for every $100 of assessed value on vacant and abandoned properties, a measure intended to discourage banks and mortgagors from holding on to foreclosed properties for a prolonged period of time. 2008 Providence foreclosures:

January…………………. 123

February………………... 112

March ………………..…. 118

April……………………... 167

May ………….………….. 156

June………….………….. 145

July……….……………... 111

August………………….. 124

September …………….. 95

October………………… 179

Year-to-Date Total…. 1,330

Source: City Department of Planning

and Development

pmarcelo@projo.com