Tags: foreclosure | washington dc | federal | budget cuts

Foreclosures Surge in DC Suburbs Following Federal Budget Cuts

Thursday, 10 Oct 2013 07:03 AM

Foreclosure starts in the Washington suburbs surged last month following federal budget cuts that have made it harder for some homeowners to pay their mortgages, even as defaults declined across the U.S., RealtyTrac said.

Initial foreclosure filings climbed 144 percent from August in Fairfax County, Virginia, and more than doubled in Prince William, Loudoun and Fauquier counties, the real estate research firm said. Fairfax’s jump was the biggest nationally among counties with populations of 1 million or more.

This year’s across-the-board budget reductions have led to “sequester pain” including work furloughs that began in June, according to the Bipartisan Policy Center. Homeowners may be hurt further by the partial government shutdown as President Barack Obama and House Republicans wrangle over spending, said Brian O’Reilly, president of Collingwood Group LLC.

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“There is no question that the sequester has had an impact on the economy in Washington,” O’Reilly, whose Washington-based firm advises financial clients, said in a telephone interview. “And against the backdrop of the current shutdown, I would say it would not be a surprise to anyone to see continued softening in this area.”

In Maryland, where required court approvals for home seizures lengthen the foreclosure process, first-time notices more than doubled from a year earlier in Montgomery County, and tripled in Frederick County, according to Irvine, California-based RealtyTrac. Maryland’s 230 percent gain statewide ranked second in the U.S., behind a 263 percent surge in Maine.

Real Losses

“While we only have anecdotal evidence thus far of the impact of sequestration on private-sector businesses and workers, we still hold to our belief that real job losses (not just furloughs) in small- and medium-sized businesses have already begun,” the Washington-based Bipartisan Policy Center said in an Aug. 2 report. The center was founded in 2007 by former Senators Bob Dole, Tom Daschle, Howard Baker and George Mitchell.

Total U.S. filings — default notices, scheduled auctions and bank repossessions — plunged 27 percent from a year earlier to 131,232, the 36th straight decline on an annual basis. Filings fell in 33 states.

The national numbers “show a housing market that is haltingly returning to health,” RealtyTrac Vice President Daren Blomquist said in the report. “Foreclosures are clearly becoming fewer and farther between in most markets.”

Federal Contracts

The shutdown that began last week may hurt vendors long after disputes over spending are resolved, Michael Lewis, managing director at McLean, Virginia-based Silverline Group LLC, said in an interview. Federal agencies award more than $500 billion a year, or about $1.4 billion a day, to tens of thousands of contractors, with late payments, halted work and canceled solicitations accumulating to the detriment of companies and their workers.

About 800,000 federal workers, including Defense Department inspectors and auditors who help certify invoices, were furloughed when the shutdown began on Oct. 1. Most of about 350,000 civilians workers will be reinstated, the Pentagon said on Oct. 5.

Professional and business-service employment in Fairfax County, where the Central Intelligence Agency has its Langley headquarters, dropped by 1,500 jobs, or 0.4 percent, in the 12 months through July, the second consecutive decline on an annual basis, according to the county website. Federal agencies pared 400 jobs, and the construction industry lost 3,800.

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Virginia’s 52 percent monthly increase in foreclosure starts was the second-highest in the U.S., after New Jersey’s 55 percent, according to RealtyTrac.

“Fairfax County is at risk of continued softening because 35 percent of jobs in the county are directly tied to government employment or indirectly through contractors,” said O’Reilly of Collingwood Group. “We can anticipate federal spending levels likely decreasing further, certainly not increasing.”

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Foreclosure starts in the Washington suburbs surged last month following federal budget cuts that have made it harder for some homeowners to pay their mortgages, even as defaults declined across the U.S., RealtyTrac said.
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2013-03-10
Thursday, 10 Oct 2013 07:03 AM
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