Unique lottery helps Va. county workers buy homes

(this story sounds like a great idea! Until you figure out that the county has basically taken over foreclosed houses, and are almost giving them to their employees! Of course, the county employees had to get in a lottery system, but about 1/2 of got into the lottery "won". Since the county doesn't want to appear to be using taxpayer money to give houses to their employees, they set up a $50 million account with SunTrust Bank, and then that bank handles the details . . .
Maybe those Obama supporters that thought that since he won, they wouldn't have to pay their mortgage, etc., were right.)

Matthew Barakat, AP Business Writer

WOODBRIDGE, Va. (AP) -- Just out of college and eager to move out of her parents' home, Karin Gagnon became giddy when her name was called out Tuesday in a unique lottery.

The 22-year-old was one of 167 Prince William County employees who won incentives that could be worth several thousand dollars to buy a home in the suburban Washington county, which has been rocked by a wave of foreclosures.

County officials believe the lottery was the first of its kind nationally. It has simultaneous goals of putting a dent in the county's housing glut while helping county employees -- about 40 percent of whom live outside the county -- afford housing in Prince William.

But the county also did not want to commit taxpayer funds. So they struck a deal with SunTrust Bank: The county put $50 million of its investment portfolio into certificates of deposit from SunTrust, something it would have done anyway. In return, the bank agreed to offer a series of financial incentives to a select number of county employees.

Under the program, a person taking out a $200,000 mortgage would receive $2,500 in credits at closing. The money could be used to reduce closing costs or to buy a lower interest rate.

Participants are required to open a SunTrust banking account, but they also receive an additional $250 for doing so.

Corey Stewart, chairman of Prince William's Board of Supervisors, said the program was a perfect example of public-private partnership.

"We're going to be taking 167 homes out of inventory," Stewart said. "And we're leveraging private funds. No locality is in a position to drop tens of millions of taxpayer dollars to start buying foreclosed homes."

As the housing bubble burst and thousands of homes in the suburban Washington county have gone into foreclosure, home values have plummeted to levels where county employees like teachers and police officers -- once priced out of the market -- can afford to buy in the county again. Winners in the lottery can buy homes up to $300,000, foreclosed or not.

Gagnon, who works for county supervisor Martin Nohe, said she has been watching the market and believes she can afford a town house in the $90,000 price range. A few years ago, not even the cheapest housing in Prince William could be had for $90,000. . . .

. . . . . . Other counties are taking a more aggressive approach. Fairfax County, Prince William's larger neighbor, dedicated $6.5 million in county funds to a program called the Silver Lining Initiative, which aims to help first-time homebuyers purchase 100 foreclosed homes in the county. The county itself intends to buy 10 homes directly.

Its incentives are much more generous: Approved applicants receive interest-free second mortgages worth up to $92,000.

Homeowners are not required to make payments on that mortgage while they live in the home, and if at the end of the 30-year mortgage the homeowner still lives there, the entire mortgage is forgiven.

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