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Sterling hit hardest by subprime loans, report says
During the robust housing market of three years ago, the number of home buyers in Sterling given risky subprime mortgages was two to three times the number given to buyers in most other parts of Loudoun.
Now, because of this, Sterling is experiencing the biggest spike in foreclosures in Loudoun.
According to a report by Loudoun County economist Jack Brown, more than a third of all the home loans awarded in the Sterling communities of Sterling Park, CountrySide and Sugarland Run in 2005 were subprime.
Sterling Park and Sugarland Run saw the highest percentages at 42 and 41 percent respectively, while the northeast portion of Leesburg also saw a high amount -- more than a third.
Subprime mortgages are given to home buyers with below-average credit at higher interest rates than traditional mortgages. Such mortgages have largely been blamed for the gloomy state of the housing market.
Brown's report, presented to the Board of Supervisors on Feb. 20, also confirmed that Sterling and parts of Leesburg are seeing the highest rates of foreclosures in Loudoun. Foreclosures, he said, are lowering the value of surrounding homes. Earlier this month, the county's Assessor's Office reported that homes in Sterling dropped in value by an average of 16 percent, with parts of Leesburg also seeing double-digit decreases.
From 2006 to 2007, the number of foreclosures in Loudoun jumped by about 800 percent. Near the end of 2007, foreclosures averaged 124 a month in the county. Meanwhile, foreclosed homes now account for roughly a quarter of all home sales in Loudoun, the report said.
As has often been reported, the housing meltdown in Loudoun has been most visible in Sterling Park, a working-class community of aging, lower-priced homes. Though encompassing a larger area than just Sterling Park, there were 453 bank-owned homes with Sterling addresses as of Feb. 25, according to RealtyTrac.com. Another 381 were either in pre-foreclosure or up for auction.
In comparison, there are now 183 homes with Ashburn addresses now owned by a bank and another 159 in pre-foreclosure or scheduled for auctioning.
With the distressed state of the housing market, county staff has warned supervisors that public services could be strained by people in need of assistance. They also said to expect to see an increase in incidences of multiple families sharing a home.
After hearing Brown's report, Supervisor Eugene Delgaudio (R-Sterling) laid much of the blame for the state of Sterling Park's housing situation on illegal immigrant homeowners, who, he said, have been abandoning their homes in light of mounting mortgage payments.
Meanwhile, Supervisor Jim Burton (I-Blue Ridge) said the tax hike proposed in the county's next fiscal plan may be difficult for homeowners to swallow in such a bad housing market. The proposed tax rate would, on average, add $640 to homeowners' real estate tax bills.
"How can you justify a 13.5 percent increase on people who are trying to figure out how to refinance so they can stay in their homes?" he said.
On the up side, according to Brown's report, since the issuance of subprime mortgages "has been virtually eliminated," he is predicting an easing off in foreclosures in 2009.
Contact the reporter at jjacks@timespapers.com
My poor Sterling home. It was such a great place to grow up. Now its littered with abandoned homes and trashy lawns. What's next, people burning down their homes because they can't afford to pay their mortgages. This is all going to get worse before it gets better.
Posted by jesse
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