It's my pleasure to provide you with an update on the important housing issues that are being undertaken by the Virginia Foreclosure Task Force. As you know, the Task Force is part of Governor McDonnell's Virginia Housing Policy initiative and chaired by Deputy Secretary of Commerce and Trade Carrie Roth. The Task Force meets quarterly to assess issues associated with Virginians experiencing or at risk of foreclosure, as well as to keep elected officials and others informed of foreclosure-related topics and concerns.
During the most recent Task Force meeting, held in September, a number of critical topics were examined, including a review of foreclosure trends in Virginia presented by VHDA Senior Policy Analyst Barry Merchant. Current housing market trends are mainly positive. Home sales are increasing, inventory is tightening, prices are again appreciating and the share of distressed sales is falling. Mortgage market trends are also positive. Initial loan defaults are down and the substantial backlog of distressed loans is slowly being resolved. Nonetheless, the market recovery remains fragile and federal efforts to address current challenges continue to postpone resolution of long-term issues, including the future structure of the residential mortgage market.
The continuing impacts of, and need for, foreclosure counseling was also a subject of major discussion. The Task Force was pleased to learn that many Virginians will have greater opportunities to find housing or avoid foreclosure because of the grants recently awarded by VHDA. These grants will enable housing organizations with Certified Housing Counselors to continue their mission of providing the homeownership counseling, education and foreclosure prevention that can help secure the financial future of their clients.
In addition, the Task Force requested that foreclosure initiatives be a priority in the newly created Virginia Housing Trust Fund. Earlier this year, Virginia's House Appropriations and Senate Finance Committees appropriated $7 million from the general fund provided from the Commonwealth's share of the Mortgage Servicing Settlement Agreement to finance the Fund in FY 2014 (July 1, 2013). The plan, submitted to the General Assembly on November 1 to help move the Fund forward, recommended two responses to foreclosure issues. First, the plan advocated that $500,000 be made available for additional support of foreclosure counseling. The plan also proposed that $1,000,000 be set aside for a Community Improvement Home Loans demonstration program to assist in transforming previously foreclosed homes into community assets.
Last, but certainly not least, the Task Force took a hard look at the emerging problems associated with “strategic defaults.” Strategic defaulters are borrowers who stop paying on their mortgage despite having the financial ability to make the payments. Strategic defaults usually occur after a drop in the house's price leaves the amount owed greater than the value of the property. As a result, the property has negative equity or is underwater, and is expected to remain so for the foreseeable future. Strategic default is a real concern for mortgage lenders, organizations like VHDA and others, trying to provide affordable housing to qualifying Virginians on a sustainable basis, now and into the future. The Task Force concluded that resources needed to help responsible borrowers are being directed to offset losses caused by those who can afford to pay, but have chosen not to do so.
Again, thank you for all of your support and assistance as we work to help Virginians impacted by foreclosure and the economic downturn. We look forward to our continued partnerships with you.