I wish I was writing to tell you all I won the Mega Millions this last week. No such luck! But Fauquier & Culpeper county are a little richer thanks to the Neighborhood Stabilization Program. Fauquier County was awarded $1.5 million. Culpeper got $1.2 million. The money will be used to buy, rehab and resell foreclosures in neighborhoods hard hit by the real estate downturn.

In Fauquier that means the southern end of the county. In Culpeper think Lakeview for sure.

I got one thing wrong in my earlier blog about this. I thought it would be too late in the process for them to get the money. They met the deadline but given the money already awarded and the competition I really didn't think Fauquier & Culpeper would get any.

It's too soon to know if I was right about my other reservation. The foreclosures are getting fewer and fewer and almost always involve bidding wars these days. It'll be interesting to see what the counties are actually able to purchase with this money.  There are plenty of short sales, just not so many foreclosures these days.

Fauquier County is working to get funds from the Neighborhood Stabilization Program. The latest information says that they're seeking a grant of $2 million with which to purchase foreclosed homes. They also acknowledge that they're more likely to get only $1 million.

There are certainly still a fair number of foreclosed homes around. Out of the 75 homes sold in Fauquier last month, 28 of them were foreclosures. Out of those 28, 15 would fall into the price range (130K to 250K) that the county is looking at.

But the number of foreclosures in the lower price ranges is shrinking and they are often snapped up fast, sometimes these days, even with multiple offers. It will be interesting to see if a government entity can be nimble enough to compete with the first time buyers who are snapping these up.

The other complication here is the appraisal requirement for the program. In order to qualify for the program the Fauquier can not pay more than 85% of the appraised value of the home. Since the typical homebuyer can get a mortgage as long as the appraisal is 100% or more of the purchase price the bank will certainly find the county's offer more risky. If I'm the asset manager for the bank and I had multiple offers, I'd almost never choose the county offer.

I say all this not to trash the Neighborhood Stabilization Program. It was a good idea. The problem has been in the execution.

While in October 2008 the county was shown as having 228 bank owned properties., the MLS currently lists only 29 for sale in Fauquier County.

In the time it took to roll the program out and talk the counties into participating and then have them put together packages, the worst of the crisis has passed.

The program will still do some good if they're able to actually buy homes. It will help working families afford a home of their own in what is still a relatively high cost living area.

But no one should believe that this program will have any impact on stabilizing market conditions in any neighborhood. Time and the market appear to have already taken care of that.

I mentioned in a recent blog post that the Commonwealth of Virginia is desperately seeking a home for monies from the federal government, as part of the Neighborhood Stabilization Program, designed to help localities buy up foreclosed properties.

Hallelujah! Fauquier County is going after that money! Kristen Slawter has been working on this for the county and will be putting together a grant application of up to $2 million to buy properties in Remington and Bealeton.

I hope there's a lot of local support for this effort. There is an informational meeting being held at 6 p.m. on Wednesday, April 15th at 10 Hotel Street in Warrenton.

These homes would be rehabbed if necessary and then sold to local low or moderate income residents. There's a huge need for more affordable housing in the county. If we can get people homes and reduce the number of foreclosures I think we've got a win/win for everyone!

Virginia was awarded $38.7 million from the federal government to buy foreclosed homes. This was part of the Housing and Economic Recovery Act of 2008. And, Virginia's been trying to get rid of it ever since!

The program is called the Neighborhood Stabilization Program. The funds are designed to allow local communities to purchase foreclosed homes and then to rehabilitate, resell and/or redevelop these properties to stem the decline of housing values in a neighborhood.

And, even better, it's then possible to combine this with other programs to help local police, teachers, firefighters, etc. to become homeowners.

So, why is the Commonwealth having so much trouble giving this money away?

They recently sent representatives to the mid-year Virginia Association of REALTORs meeting to drum up interest among real estate agents. The Commonwealth has sponsored a series of seminars around the state to inform localities about the program and how to apply. And, still, much of the money goes unused.

I know it's not because local communities don't have a problem with foreclosures! Ask anyone in Lakeview in Culpeper if they'd like to see some homes bought up by the government to help stabilize housing prices!

So, I'm going to theorize why the money sits there.

1. Local governments view the burden of taking this project on as requiring too many resources. There is, of course, paperwork to be submitted. Appropriate neighborhoods must be found and data on the property values and vacancy rates obtained. The requirements state that a qualified pool of buyers must be available. Once homes are bought with this money, they must be rehabbed and then sold. Potential buyers must be screened, etc. This probably all sounds overwhelming to local governments already spread thin.

Solution: Partner with local real estate agents, Habitat for Humanity and other local groups who can contribute expertise. Form a task force to make this happen. I'll volunteer my time to make this work!

2. A belief that there aren't any neighborhoods that qualify. They're looking at neighborhoods that have somewhere in the neighborhood of 10% foreclosure rate.

Solution: But "neighborhood" is defined by the local entity and as long as you can justify why you chose that as a "neighborhood" it shouldn't be too hard to find areas that would qualify. Heck, last time I checked there were enough foreclosures in Rappahannock County to qualify!

3. The word hasn't gotten out and local governments don't know about the program.

Solution: I'm doing my bit here. I hope other bloggers will add their voices. Local press can help. And local communities of individuals who might benefit, i.e. teachers, police, fire fighters, can let their local governments know they'd like to see this program used here.