A new federal program aimed at stabilizing neighborhoods hit by foreclosures will inject roughly $46 million into Virginia next year, with South Hampton Roads receiving as much as $10 million in help.
The money, provided through the federal department of Housing and Urban Development, will allow cities to buy vacant foreclosed properties with the hope of renovating them and getting them into the hands of new homeowners.
But for municipalities swamped with hundreds of bank-owned properties, a few million won't go very far, housing officials said.
"You can't solve everybody's problem," said Christopher Walker, director of research and assessment for the Local Initiatives Support Corp., a national nonprofit that helps community development efforts. "You have to focus."
Norfolk has nearly 500 bank-owned properties, according to Realty Trac, a company that tracks foreclosures nationwide. Virginia Beach has more than 500, and Chesapeake roughly 340. Portsmouth has about 120, Suffolk about 65. The properties are
scattered across the region, with hotspots at central Norfolk, Kempsville and South Norfolk.
To apply for the federal money, cities must identify up to three specific areas where vacancy rates are above 10 percent and where foreclosed houses can be purchased for rehabilitation and resale.
Officials in Norfolk, Portsmouth, Chesapeake and Virginia Beach said they plan to apply. Officials with the city of Suffolk and the Suffolk Redevelopment and Housing Authority failed to return multiple phone calls over the past two weeks.
The national Neighborhood Stabilization Program is a $3.92 billion effort to help cities swamped with empty, bank-owned properties. States hardest hit by the housing downturn - California and Florida - each will receive a half-billion dollars through the program.
Across Virginia, Fairfax and Prince William counties received larger amounts because the foreclosure problems there are more severe. The rest of the state will share $38.7 million, doled out in maximum allotments of $2 million per city.
In Norfolk, officials originally hoped to receive between $5 million and $7 million, said Ron Williams, special assistant to the city manager. If Norfolk gets $2 million, it will be used to buy and renovate about a dozen houses, he said.
Norfolk city and housing authority employees have been analyzing neighborhoods that could benefit. The money likely will be used in an area where officials have already done revitalization work, Williams said. "This has to plug in to our existing programs."
In other cities, officials said they plan to stretch dollars by borrowing or using other federal funding as a supplement.
Virginia Beach officials hope to cobble together at least
$4 million to tackle the problem, according to Andy Friedman, Virginia Beach's director of housing and neighborhood preservation.
In Virginia Beach and Chesapeake, city leaders said they want to partner with nonprofit developers who focus on low-income home buyers, such as Habitat for Humanity.
Both localities face added pressure that comes with foreclosures scattered across the city, including in higher-income neighborhoods. "We can't go out and purchase every property that's been foreclosed upon," said Dewayne Alford, deputy executive director of the Chesapeake Redevelopment and Housing Authority.
"Some are beyond the income of the first-time home buyer. So the market's going to have to take care of some of that."
Alford said his agency is looking to use the money in neighborhoods around Indian River Road, Airline Boulevard, upper Western Branch and in South Norfolk.
Cities must apply for the money by the end of January; it is likely to be doled out by early summer.
Todd Christensen, deputy director of the state's Department of Housing and Community Development, said he hopes Virginia's $38 million share will result in about $60 million in spending, with the difference coming from localities selling renovated houses and reinvesting that money.
"We're not here to take care of long-standing endemic housing problems," Christensen said at the Governor's Housing Conference in Hampton in early November.
"We want to see a neighborhood... where values have dropped because of foreclosures. This program can come in and have an impact on that."
Meghan Hoyer, (757) 446-2293, meghan.hoyer@pilotonline.com
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Banks
The banks don't have to foreclose. They can rework the loan. Not now, if the city is going to buy the property, then the homeowners will be out. It seems like it would make more sense if the city helped the homeowners BEFORE foreclosure. This would prevent the houses from being empty, instead of just shuffling people around.
Waste of our Tax Dollars
So let me get this right... I do all the right things, keep my credit clean, scrimp and save to afford a reasonable down payment, pick a home that I can afford within my means, and throw every extra penny into the principal to pay off the loan early. My neighbor, who has purchased a home much bigger than mine, blew his savings on plasma screen TV's, new SUV and vacations to the Caribbean, is now in default, but not to worry! Uncle Sugar will dive in, restructure his loan, use my tax dollars to write off his additional principle, and he is rewarded for his actions. I say, let the market adjust. A fool and his money are soon parted. We dont need the government rushing in and making this even worse (as the Feds are painfully prone to do every time they intervene). Privatize profits and socialize losses? No thanks.
Propin' up the prices while the house of cards falls
The gov't programs hurt the people that need them. Instead of the prices of housing coming down to where the lower income can buy a house and pay it off in a reasonable amount of time, these gov't groups come up with special loans that allow the lower income to pay for 30 years (which is a higher price). If the gov't program wasn't there, the prices would probably drop because the loans are there to make the deals happen at higher prices. Then the lower income could buy them at a lower price and pay them off quicker. But that doesn't bode well in having a nation of people shackled to 30 year loans on houses. While we're at it, eliminate the mortgage interest tax deduction, or make all interest tax deductable. One or the other.
Would be nice if it didn't affect us
I'm in the same state of mind as the last poster. But, unfortunately, I realize how this affects the rest of us that mind our finances and ask questions before signing anything. I'll say this, though, as I come across these morons on the street I'll be sure to make them feel lower than a pregnant ant and won't cut them ANY slack if I'm in a position to do so.
Boooo!
Hey, why doesn't the gov't stop taking *MY* tax money and giving it away? Let the banks and their investors take the loss on the BAD LOANS that THEY MADE instead of buying the garbage at above market prices using taxpayer money. Let the banks sell the stuff AT MARKET RATE to the next generation of people? Let those people buy them AT LOW PRICES instead of lipsticking up the things to make them look pretty, and marking them up really high? The gov't interference in the housing market helps to cause the issues. Most items decline in value as they are used, houses should be the same.
Intriguing..
that Northern Virginia is receiving more money (than other areas with older properties) to renovate practically new houses that originally sold for 450 thousand plus.