Sunday, August 17, 2008

Staving Off The Next Wave Of Foreclosures - Washington Post

Sunday, August 17, 2008; B08

The growing problem of home foreclosures in the Washington region and specifically in Montgomery County has affected an already uncertain economic situation and caused suffering for families who have seen their piece of the American dream slip between their fingers.

Montgomery County had a total of 1,468 foreclosures in April and May, while it had 1,646 during the first three months of the year. Both figures dwarf the 183 foreclosures in the county during the first three months of 2007. The hardest-hit areas include Gaithersburg, Germantown, Wheaton and Aspen Hill. In Montgomery County, foreclosures seem to cluster in the sector of "starter" detached homes and older townhouses.

To tackle this problem, we must work to prevent foreclosures before they happen. Roughly 60 percent of borrowers facing foreclosure have never talked with their lender or a counselor. In many cases, there may be opportunities to work difficulties out and prevent foreclosures. To help in this effort, the county has:

· Organized public meetings throughout the county to reach at-risk homeowners with information on what they can do to save their homes.

· Partnered with the state to fund the foreclosure counseling necessary to problem-solve with homeowners. Nonprofits funded under this program are working with about 200 families. We are seeking to add more federally certified counselors and will be providing training in the county to increase the available pool of foreclosure counselors.

· Matched $2.5 million in state funding with $2.5 million from the county's Housing Initiative Fund to underwrite some potential losses of lending institutions in refinancing homeowners at risk.

· Enlisted the county's churches, synagogues, mosques and other congregations to help spread the word about public meetings, counseling and the toll-free 1-877-462-7555 HOPE hotline to find help.

· Convened meetings with area banks and real estate agents to put their resources and skills to work in attacking the foreclosure issue.

· And increased our efforts to identify vacant foreclosed properties and to enforce housing codes to preserve the quality of life in neighborhoods where foreclosed properties might become an eyesore.

In the past few months we have inspected 400 properties and issued violation notices for overgrown vegetation or solid waste. We have secured voluntary compliance for all but 40 of those notices. In those cases, we have had the grass cut and charged the property owner.

The public purchase of foreclosed properties is an option that has received some attention. We have explored this option and have reservations about it as a cost-effective solution. While some properties are being sold for less than the full mortgage amount, this does not reflect a reduction from current property value. Many of the mortgages are for amounts in excess of the assessed real property value. In addition, rehabilitating foreclosed properties costs $15,000 on average. A better route may be our continuing work with real estate agents to determine the inventory of foreclosed homes and alternatives for disposition of those properties.

A home is where a family's story begins. Foreclosure is no kind of happy ending. While the problem is bigger than any local government can handle alone, area jurisdictions can -- and should -- use available resources to prevent as many foreclosures as possible.

-- Isiah Leggett


The writer is county executive of Montgomery County.

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