Foreclosure Assistance Is on the Way
Thursday, October 9, 2008
Housing officials in Northern Virginia and Richmond are meeting this week to determine how to allocate $46 million in emergency federal aid set aside to stanch the region's foreclosure crisis.
The money will probably go toward local governments' triage tactics: buying and rehabilitating distressed properties, clearing blighted areas, providing mortgage assistance to first-time home buyers and helping troubled borrowers remain in their homes and avoid foreclosure.
The $46 million is part of a nearly $4 billion package approved by Congress in July to be distributed to the nation's hardest-hit communities through the Neighborhood Stabilization Program of the U.S. Department of Housing and Urban Development.
Roughly $38.7 million of Virginia's share will be channeled through housing officials in Richmond, but $4.1 million has been allocated for Prince William County, and $2.8 million will go to Fairfax County.
Other Northern Virginia jurisdictions, including Loudoun and Arlington counties and Alexandria and Manassas, are eligible to apply for money from the state pot.
"The key thing is that $38.7 million for Virginia may seem like a big number, but in the foreclosure business, it's a pin drop in the bucket. So if we don't find ways to leverage this, it's not going to be impactful," said Bill Shelton, director of the Virginia Department of Housing and Community Development.
Several strategies are being discussed this week at a HUD summit in Washington for state and local housing officials and nonprofit groups.
According to HUD, 4.3 percent of all Prince William mortgages are in foreclosure, compared with the statewide rate of 3.1 percent. The Fairfax County rate is 2.3 percent, but both counties will probably receive additional money from Richmond, on top of the direct federal aid.
"We're mostly looking at Northern Virginia, but everyone will have the opportunity to make their case, including Richmond and Hampton Roads," said Todd Christensen, deputy director of community development for the Virginia Department of Housing and Community Development.
HUD data indicate that although Prince William, Fairfax and other Northern Virginia areas are struggling with foreclosures, those areas are far better off than the nation's hardest-hit places. In Detroit, the foreclosure rate is 16 percent, and several parts of Nevada, Florida, Ohio and California are facing rates of 10 to 14 percent.
Over the next few weeks, Washington area housing officials will meet with their Richmond counterparts, HUD staff members and area nonprofit agencies that provide housing and foreclosure services to develop spending plans that HUD will approve.
"We'll review plans quickly," HUD spokesman Brian Sullivan said. Local governments "have to demonstrate that the money will go to the areas of greatest need."
Fairfax is planning to combine its share of HUD money with $6.3 million in county funds, said Mary Stevens, deputy director of housing and community development. "We want to help homeowners in distress and buy foreclosed properties to sell to first-time home buyers," she said.
Stevens said her office would make a presentation with recommendations to the Fairfax County Board of Supervisors on Oct. 27.
Similar conversations are underway in Prince William. Elijah Johnson, director of housing and community development for the county, said the money will be used to help shore up troubled neighborhoods and get distressed properties off the market. Any amount of assistance will help, he said.
"Something is always better than nothing," Johnson said. He said his agency had never engaged in this type of direct-market intervention.
"This is uncharted territory," he said.