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County to seek housing-crisis aid

January 06, 2009|By HEATHER KEELS

HAGERSTOWN -- The Washington County Commissioners voted Tuesday to apply for $1.18 million under a federal program created to help communities affected by foreclosure and subprime lending.

The county would use the funds for a new transit center and several programs that would help sell bank-owned properties in the 21740 ZIP code, where the foreclosure index is most severe, said Sonja Hoover, fiscal and research specialist for the Hagerstown-Washington County Economic Development Commission.

The funding, made available by the Housing and Emergency Recovery Act of 2008, comes from the U.S. Department of Housing and Urban Development's Neighborhood Stabilization Program. Maryland has been awarded more than $26 million and is distributing it through the Maryland Neighborhood Conservation Initiative program.

The state has given preliminary approval to the county's request, Hoover said.

Washington County's application requests include:

o $1 million for a lease purchase program that will allow the Housing Authority of Washington County to purchase properties that were foreclosed upon in the 21740 ZIP code and rent them out with an option for the renters to purchase them.

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o $65,000 toward a new transit center for the county transit system.

o $50,000 for a down payment and closing-cost assistance program that would provide deferred loans of up to $10,000 to eligible buyers of foreclosed-upon properties in the 21740 ZIP code.

o $10,000 for a counseling program for potential buyers of foreclosed-upon properties in the 21740 ZIP code.

o $55,000 for administrative costs.

The commissioners voted 4-0 to apply for the funds. Commissioner William J. Wivell was absent.

Commissioner Kristin B. Aleshire gave his approval after the local officials who would administer the programs assured him that potential buyers would be screened and counseled to ensure they were prepared for the obligation.

The lease purchase program funding would initially allow the Housing Authority to buy and rent out about five homes, but as participants buy the homes, the Housing Authority would reinvest that money in additional homes, Housing Authority representative Richard Keesecker said.

To be eligible for the lease purchase program, households would have to make less than 50 percent of the local median income, Keesecker said. For a family of three, 50 percent would be about $33,100.

They would have an option to buy the rental property at its current appraised value within the first year, and would be able to participate in a county program that provides counseling on credit, budgeting, employment and homeownership, he said.

To be eligible for the down payment and closing cost assistance, home buyers could not make more than 120 percent of the median income, said Sharon W. Disque, executive director of the Hagerstown Neighborhood Development Partnership.

The buyer would have to be purchasing a bank-owned property in the 21740 ZIP code to be used as his or her principal residence, would have to use the Maryland Mortgage Program and would have to complete housing counseling prior to signing a contract, Disque said.

If the assistance program is a success, money repaid by recipients likely would be reinvested in the program, she said.

The transit center is eligible to receive program funding because it would help redevelop a blighted site and support the county's transit system, which helps residents get and keep jobs, Hoover said.

The county wants to relocate the transfer point for County Commuter buses and Hopewell Express shuttles from its current location under the railroad bridge on West Washington Street to the lots the county recently purchased at the corner of North Prospect and West Franklin streets, Real Property Administrator Joe Kuhna said. The new location would be more efficient and more convenient, he said.

The Neighborhood Stabilization funding would cover a large percentage of the cost of building the center, Kuhna said.

The aid the county is requesting from the program is relatively small compared to the magnitude of the county's foreclosure problem, Disque said.

In the first 10 months of 2008, more than $49 million worth of property was seized through foreclosures in Washington County, Disque said. Nearly all of those foreclosures were residential properties, and about 70 percent were the owner's principal residence, she said. The average value was $200,000, she said.

In the 21740 ZIP code, which includes part of Hagerstown and extends north to the Pennsylvania state line, there were 462 foreclosures from the first quarter of 2007 through the third quarter of 2008, according to the Maryland Department of Housing and Community Development, which classified the foreclosure index in that ZIP code as "severe," the second-highest of its five classifications. The 21742 ZIP code foreclosure index was classified as "high."

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