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Virginia City Aims to Buy, Fix Bank Foreclosed Houses

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By : John Cutts    99 or more times read
Some families in Franklin, Virginia could soon be owners of affordable houses if the city's application for a federal grant would be awarded under the Neighborhood Stabilization Program (NSP).

The NSP, administered by the U.S. Housing and Urban Development (HUD), is part of the Obama Administration's program to alleviate the impact of the foreclosure crisis on severely affected neighborhoods across the country.

The grant is coursed through the Virginia Department of Housing and Community Development. The agency is set to award $503,519.91 to the city of Franklin to allow it to purchase and renovate vacant and bank foreclosed houses and sell them to eligible low-income and medium-income families.

According to industry experts, Franklin is competing for the grant with other counties and cities across the state. Previously, the city received a planning grant amounting to $25,000 under the Department of Housing and Community Development. The grant was used to study the effects of the foreclosure crisis in the city.

City officials clarified that the federal grant is intended for use to prevent foreclosure houses from becoming breeding grounds of crimes in neighborhoods. They pointed out that the funds will not be used to help distressed homeowners save their properties from foreclosures.

They added that the money is intended to remove blights that foreclosure homes have become, noting that vacant properties attract vandals and vagrants.

So far, the city has identified some properties to be acquired and rehabilitated in Meadowbrook and Oldtown neighborhoods. Under the plan, the city will purchase the foreclosed homes at 15 percent less than their assessed value in order to sell them at affordable rates.

To qualify, prospective buyers should complete a homeownership course. Meanwhile, families who will qualify to purchase homes under the program may also have the opportunity to apply for a program that provides down payment assistance and closing costs.

The city is expecting to have some competition with investors who pay cash to buy bargain-priced foreclosure properties to rent.

Data provided by HUD showed that Franklin has the third highest foreclosure rate-per capita in Virginia. Industry experts projected that the city's foreclosure rate will continue to increase given the worsening economic downturn and the rising unemployment rate.
John Cutts has been educated in the finer points of the foreclosure market over 5 years.

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