Home defaults could get worse, UVa report says

By Brian McNeill

Published: December 25, 2008

An urban planning class at the University of Virginia has found that home foreclosures in Charlottesville and Albemarle County have shot up over the past year.

In a report released this week, Professor Nisha Botchwey’s neighborhood planning workshop class showed that 354 foreclosures occurred in the city and county between June 2006 and September 2008.

Charlottesville, which had a total of 91 foreclosures during the study period, saw its peak number of foreclosures occur in June 2007 when nine homes went into foreclosure.

Albemarle County had a total 263 foreclosures, the report found.

The county’s peak was in March, when 34 homes went into foreclosure.

The study found that Charlottesville recorded nine foreclosures between June and September in 2006. During the same period in 2008, there were 17, marking an 89 percent increase over the past three years.

While Charlottesville and Albemarle continue to have elevated levels of foreclosure, both localities are dwarfed by record levels seen recently elsewhere in Virginia, most notably in Northern Virginia.

“We realize that in Charlottesville, the number of foreclosures is low compared with the rest of the state,” said fourth-year UVa student Sarah Bridger, an urban and environmental studies major and one of a dozen such students who worked on the study. “But, according to the data, we also realize that this problem could get much worse.”

Bridger pointed out that 31.4 percent of adjustable-rate mortgages in Virginia are scheduled to have their rates reset in the next 12 months, increasing the possibility that struggling homeowners will fall behind and default on mortgage payments. “We expect we’ll see more foreclosures in Charlottesville in the next year,” she said.

Bridger added that as the economic recession deepens, foreclosures are increasingly affecting families and individuals from all income brackets.

According to data compiled by the Federal Reserve Bank of Richmond, the Charlottesville Metropolitan Statistical Area — which includes Charlottesville and the counties of Albemarle, Fluvanna, Greene, and Nelson — had a foreclosure rate of 0.53 percent in September. Statewide, the foreclosure rate was 1.76 percent and the nation was 2.57 percent.

For Charlottesville, the city’s foreclosure rate of 0.31 percent indicates that 29 out of 9,246 mortgage holders were in foreclosure. And an estimated 62 families were more than 90 days past due on mortgage payments.

Albemarle’s foreclosure rate of 0.41 percent in September suggests that 78 homes were in foreclosure, while 100 residents were three months past due on payments.

The number of foreclosures for the entire Charlottesville region continues to rise.

In October and November of last year, there were 94 foreclosure notices filed with The Daily Progress. During those months this year, there were 114 such notices, marking a 21.3 percent increase.

Botchwey’s class was funded through UVa’s vice provost’s office as part of an effort to expand the university’s outreach into the community.

Botchwey and her class partnered with local affordable housing organization Piedmont Housing Alliance in an attempt to gather data about Charlottesville’s foreclosure problem and make policy recommendations.

The report raises several questions, Botchwey said. Could vacant, foreclosed properties be repurposed for affordable housing? Is there more Charlottesville could do to prevent foreclosed properties from becoming blight in their neighborhoods?

“I think this was a success not because we were able to answer all the questions, but because it raised so many new questions,” Botchwey said. “It highlighted a lot of needs for our community.”