Mark Winston Griffith
While Congress Dithers on Foreclosures, Fairfax takes Action
One of the more under-reported effects of the foreclosure crisis is the state of abandonment in which many areas across the country have been left. While most foreclosure stories focus on the plight of the individual, the neighbors of those forced from their homes because they couldn't meet the terms of their subprime mortgage are stuck with the residual effects: Blight, property devalution, deterioration of tax base.
In the absence of meaningful assistance from the federal government, Fairfax, Virginia has joined the growing number of cities and counties that are combating the effects of foreclosure on their own terms.
According to a Washington Post article:
Fairfax County approved a landmark housing program yesterday to buy foreclosed properties for middle-income families…County leaders said the program, through which Fairfax will purchase some properties outright and help families buy others through subsidized loans, takes advantage of a unique moment when thousands of homes are entering foreclosure and available for purchase at below-market prices. The program will expand the county's stock of affordable housing and help stabilize areas where clusters of abandoned, unkempt properties in foreclosure threaten the value and vitality of surrounding neighborhoods, county officials said.
Fairfax is agreeing to spend more than $10 million in tax revenue toward the purchase of as many as 200 foreclosed houses. The county will purchase 10 houses outright; the rest will be purchased by qualifying buyers with the help of government-backed, low-interest loans. Buyers will be eligible for subsidized mortgages as well as low-interest second trusts up to $70,000. Most of the assistance will be directed to first-time buyers earning as much as $75,600, or 80 percent of the area's median income. Most purchases will be limited to $385,000 and exclude condominiums. All of the money in the first year would come from existing housing programs.
One of the most encouraging features of this program is that it represents a local government taking the initiative and creative license to intervene in an economic down spiral. It also pre-empts the possibility that a deep-pocketed corporate speculator will snap up the properties and flip them at over-inflated prices.
Of course, the program is modest in its scale. And one "moral hazard", if you will, is that while it helps meet affordable housing and anti-abandonment needs, the program seems to be waving the white flag on helping homeowners avoid foreclosure in the first place. On the other hand, there is perhaps no better example of a local government making proverbial lemonade out of abandoned lemons.
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Posted at 8:00 AM, Jul 02, 2008 in
Community Development
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