Foreclosure is not a four-letter word, but it seems to have some of the same implications these days as the impacts of foreclosure continue to grow. Our region which, according to the Metropolitan Washington Council of Governments (MWCOG or simply COG), was relatively free of major foreclosure problems, now has one of the fastest foreclosure rates in the nation.
COG estimates that more than 15,600 homes in the region went into foreclosure in the past year. That is about the same number of households in Annapolis, Maryland! Prince William County, Virginia, and Prince Georges County, Maryland, have been hit hardest in the region by foreclosures. At the same time, home prices also have fallen precipitously. “Hot spots” identified by a George Mason University study on foreclosures, which was released during a COG and Freddie Mac-sponsored Regional Foreclosure Summit last Thursday, include the City of Manassas, Dale City, and Gainesville/Bristow in Prince William County, and the Accokeek area of Prince Georges County. The same study by Professor John McClain also identified impending “hot spots” in Herndon, Centreville and the Route 1 Corridor, as well as Germantown in Montgomery County, Maryland. Experts suggest that higher gas prices will make close-in housing more attractive to buyers.
Driven by subprime mortgages and speculative activity, the impacts of foreclosure activity are widespread. From a local government perspective, the loss of property tax revenues has a severe effect on the budget for schools, public safety, human services, and public works projects. Foreclosed properties often remain vacant for long periods, and can fall into disrepair which, in turn, may attract vermin or criminal activity, creating valid concerns for the neighborhood. Foreclosure damages the owner’s credit rating and also hurts the mortgage lender and servicer who cannot collect the valid debts owed to them. Economic and emotional disruptions bring unanticipated consequences, too – job loss, breakup of families who still need housing, children who become rootless when moving from school to school.
Despite the gloomy news, the Washington metropolitan region’s economy is fundamentally strong and is more resilient due to our position as the nation’s capital. High wage jobs, especially in business and professional services, are still being added, although job growth overall is more moderate now. The Regional Foreclosure Summit brought together local government officials, financial experts, and non-profit agencies to better understand the impact of foreclosures and what we can do to help preserve the stability of our neighborhoods and our families. One immediate result is a $175,000 investment by Freddie Mac, which will be pooled with funds from the private sector and other foundations to help repair the safety net for families in foreclosure. Criteria for use of the grants pool will be shaped by outcomes of the summit and presented to the COG Board in July.
