Va. localities get U.S. aid to help with foreclosures

By: Michael Martz | Richmond Times-Dispatch
Published: September 01, 2009

Virginia is hoping that federal dollars will breathe new life into homes and neighborhoods shuttered by mortgage foreclosures in nine localities, including Chesterfield County and Petersburg.

Gov. Timothy M. Kaine announced yesterday that the state is distributing $9.4 million under a federal program created last year to help communities with high rates of home foreclosures during the recession.

The money, including $500,000 for Chesterfield and $600,000 for a nonprofit housing group in Petersburg, is part of $38.7 million allocated to Virginia through the Neighborhood Stabilization Program. The state already has distributed more than $24 million of the federal money to buy, rehabilitate and resell foreclosed homes to people with low or moderate incomes.

Richmond received $2 million from the program in June. Yesterday's announcement leaves a little less than under $5 million unallocated.

The state also is seeking an additional $40 million for the program under the stimulus law enacted by Congress this year.

Nationally, Virginia ranks 28th in home foreclosures. The state's foreclosure rate, as a percentage of total households, was 2.18 percent in the second quarter, compared with 4.3 percent nationally. However, the number of foreclosure filings rose sharply in Virginia this summer, increasing by 23.5 percent from June to July, compared with 7 percent nationally.

"This is a drop in the bucket," Kaine said at yesterday's announcement at Main Street Centre in downtown Richmond. "This is not going to solve the foreclosure problem in Virginia."

But the governor and other government officials said the money will help rehabilitate 85 foreclosed homes and help stricken neighborhoods, where foreclosures have affected the property values of other homeowners.

"As foreclosures increase, property values decline and other property owners are at risk," said William C. Shelton, executive director of the Virginia Department of Housing and Community Development.

County Administrator James J.L. Stegmaier said Chesterfield intends to use its share of the funds to fix up foreclosed homes in the Kings Forest neighborhood at Iron Bridge and Omo roads. However, he said the problem is not as concentrated as it is in other parts of the state.

"I'm not aware of any place where you've got entire blocks or anything close to that," Stegmaier said at yesterday's announcement, which also was attended by Daniel A. Gecker, vice chairman of the Chesterfield Board of Supervisors, and Deputy County Administrator Millard D. "Pete" Stith Jr.

State housing officials said the money will go through Chesterfield's program for community development block grants. They said the county is arranging for nonprofit development corporations to rehabilitate the homes for resale. Most of the proceeds from reselling the homes will return to the state to replenish the fund for addressing the problem.

"It sets up a revolving loan program essentially," Kaine said.

In Petersburg, the money will go to Pathways, a nonprofit corporation that is focusing its efforts on the Walnut Hill neighborhood in the southern part of the city. Traditionally, the group has worked primarily in the Battersea neighborhood near the Appomattox River.

"This will be an adventure in a different part of the city for us," Executive Director Dwala Ferrell said yesterday.

In addition, the governor announces grants of: