The Observer Newspapers | County Initiative Aims to Address Foreclosure Crisis

July 4, 2008

County Initiative Aims to Address Foreclosure Crisis

By Rebecca Plevin
Observer Staff Writer

The Fairfax County Redevelopment and Housing Authority will buy and rehabilitate up to 10 foreclosed homes in the county and resell those houses to first-time homebuyers or a nonprofit organization. This new approach to addressing the foreclosure crisis and creating more affordable housing is part of a three-pronged initiative that was approved Monday by the Fairfax County Board of Supervisors.

The new program is an example of "local government being proactive to its citizens," said John Payne, deputy director of the county's department of housing and community development. "This crisis affects everyone and property values throughout the community." The $6.5 million initiative, which will utilize existing affordable housing funds, will also provide foreclosure counseling to people at risk of losing their homes and assist first-time homebuyers in purchasing a foreclosed home.

Hunter Mill district supervisor Cathy Hudgins said Tuesday she supported the program because it will help stabilize local neighborhoods and property taxes. The initiative might allow the county to get a "good news story" out of the foreclosure crisis, she said, because a foreclosed property "can turn out to be a good situation for someone else."

"I think it's a good program that could be improved," Dranesville district supervisor John Foust said Tuesday. Foust said the county program would stimulate purchases of foreclosed homes in areas like Herndon that have been hit hard by foreclosures and would "fill houses with families sooner than otherwise would happen." He said the program emphasizes helping people after they have lost their homes to foreclosure, but the county should "redirect some of that emphasis to assist people from losing their homes."

When purchasing the foreclosed homes, supervisors and members of the county's inspections team will suggest properties that the county should consider buying, Payne said. He said the county would consider purchasing foreclosed homes that have a significant impact on adjacent properties and would be financially feasible to rehabilitate. He said no neighborhood would be excluded from consideration and there would not be a concentration of homes purchased in any one area.

Payne said the purchasing and re-selling of foreclosed homes would not be a profit-making venture for the county. "The goal is to reinvest any money back in programs," he said.

The foreclosure counseling portion of the program will bring together foreclosure specialists from the department of housing and community development, other county agencies and nonprofits and will coordinate efforts with the Virginia Housing Development Authority, according to a press release issued by the county on Monday. Foust said he is "optimistic that the counseling aspect will help avoid some of the foreclosures that otherwise would occur."

The county also will introduce the "Silver Lining Initiative," which will help first-time homebuyers pay for a foreclosed townhouse or single-family home of less than $385,000 with a low-cost first mortgage through the VHDA. "If we're going to be making subsidized loans available to purchase homes after they are foreclosed, then we should consider also making those same loans available to people who are facing foreclosure," Foust said.

He also said the loans should be limited, maybe to five years, so that if a homebuyer's financial position dramatically improves and he could afford a commercial loan, the county's money could be reallocated toward other affordable housing objectives.

According to Payne, the Board of Supervisors suggested engaging the help of county nonprofits for the project, and Reston Interfaith CEO Kerrie Wilson said her organization would be very interested in working with the county. She said the initiative fits perfectly with the county's and her group's commitments to ensuring that there is affordable housing for people of all income levels.