Federal Program Helps Buying Bank Foreclosures in Delaware

by Peter Vernon on Foreclosure Help

The federal Neighborhood Stabilization Program has been helping people in Delaware in buying bank foreclosures. The program has provided federal housing funding amounting to $19.6 million to help first-time homebuyers. Under the program, about 120 families will have the chance to buy and rehabilitate vacant, foreclosure houses until next year.

The Obama Administration’s program is designed to help local neighborhoods badly hit by the foreclosure crisis. It will provide funding to support state and local governments’ efforts to prevent foreclosure houses from becoming eyesores in communities.

The program has a wider area of coverage, encompassing rural areas and cities across various ZIP codes in the state. Some counties identified to be eligible under the program are New Castle, Sussex and Kent and the city of Wilmington.

According to industry experts, buying bank foreclosures would mean a lot on the recovery of neighborhoods and the housing market. They said that foreclosure properties that have been vacant for a long period of time are magnets to vandals, thieves and squatters. They also lower property values in neighborhoods.

So far, Delaware posted foreclosure filings on over 4,200 properties this year. In August, the number of foreclosure filings totaled over 550, a decline of 15 percent compared with July. Experts said that many programs were designed to help distressed homeowners remain in their houses. But the current state initiative provides buyers in the low and moderate income level extra incentives to buy abandoned foreclosure houses.

Experts said that one less foreclosed home on the market means that a family is living there, earning a living and using local services and goods. The county governments of Kent, Sussex and New Castle have their own program to administer the funds that will be allocated by the Delaware housing agency. The same goes with city governments of Wilmington and Dover.

To be eligible, buyers must meet all the income requirements, including $70,000 for a four-member family or not over 120 percent of the median income in the area.

In Sussex County, each potential buyer is given as much as $50,000 in interest-free loans, provided that it is secondary financing. Buyers may also receive $20,000 for assistance in home cleaning and rehabilitation and additional $20,000 for deposit and closing cost payments.

All participating counties and cities have partnered with nonprofit agencies and organizations to provide homebuyer counseling to those who are interested in buying bank foreclosures in Delaware.