- The Washington Times - Wednesday, February 11, 2009

Just out of college and eager to move out of her parents’ home, Karin Gagnon became giddy when her name was called Tuesday in a lottery to help Prince William County employees and the county’s struggling real estate market.

The 22-year-old was one of 167 county employees who won incentives that could be worth several thousand dollars to buy a home in a region rocked by a wave of foreclosures.

In December, 1,101 county properties entered foreclosure, according to Web site realtytrac.com.

County officials established the lottery, which they think was the first of its kind nationally, to help reduce their housing glut and help county employees afford local housing. Roughly 40 percent of the employees live outside Prince William.

Still, officials did not want to commit taxpayer funds. So they struck a deal with SunTrust Bank: The county put $50 million of its investment portfolio into certificates of deposit from SunTrust, which it would have done anyway. In return, the bank agreed to offer a series of financial incentives to a select number of county employees.

Under the program, a person taking out a $200,000 mortgage would receive $2,500 in credits at closing. The money could be used to reduce closing costs or to buy a lower interest rate.

Participants are required to open a SunTrust banking account, but they also receive an additional $250 for doing so.

Corey A. Stewart, chairman of the Prince William County Board of County Supervisors, said the program was a perfect example of a public-private partnership.

“We’re going to be taking 167 homes out of inventory,” said Mr. Stewart, a Republican. “And we’re leveraging private funds. No locality is in a position to drop tens of millions of taxpayer dollars to start buying foreclosed homes.”

Since the housing bubble burst, thousands of homes in Prince William have gone into foreclosure. Home values have plummeted to levels that give county employees such as teachers and police officers - once priced out of the market - the chance to buy in the county again. Winners in the lottery can buy homes up to $300,000, foreclosed or not.

Miss Gagnon, who works for county Supervisor Martin E. Nohe, Woodbridge Republican, thought she could afford a town house in the $90,000 range. A few years ago, not even the cheapest housing in Prince William could be found for that little.

Miss Gagnon sat anxiously through much of the meeting Tuesday while winning names were drawn from an old-fashioned gold-painted rotating drum. About half of the 320 employees who applied for the program also won.

Other Northern Virginia counties are taking a more aggressive approach.

Fairfax County dedicated $6.5 million in funds to a program called the Silver Lining Initiative, created to help first-time homebuyers purchase 100 foreclosed homes in the county. The county itself intends to buy 10 homes directly.

Its incentives are much more generous: Approved applicants receive interest-free second mortgages worth up to $92,000.

Homeowners are not required to make payments on that mortgage while they live in the home, and if at the end of the 30-year mortgage the homeowner still lives there, the entire mortgage is forgiven.

Eight foreclosed homes have already been purchased under the program, which is filled up and no longer accepting applicants. Dozens of other approved applicants are searching for homes, said Kristina Norvell, spokeswoman for Fairfax County’s housing department.

The county programs will dovetail with a federal initiative approved by Congress last year called the Neighborhood Stabilization Program, which allocates nearly $4 billion to state and local governments to buy and redevelop foreclosed homes.

None of the money has been distributed yet, said Brian Sullivan, spokesman for the Department of Housing and Urban Development. Nearly $46 million from that program has been allocated to Virginia, including about $7 million specifically designated for Fairfax and Prince William counties. The largest amounts under the federal program have been allocated to such states as California and Florida, where the housing crisis has hit hardest.

LOAD COMMENTS ()

 

Click to Read More

Click to Hide