Where's The Money?

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.

RE: Where's The Money?

Why should we artifically inflate prices? The Northern Virginia market is improving already, without this money. Sales are through the roof in PW County. First-time homebuyers are delighted. Why don't they deserve a chance, too?