Aid near for those 'hardest hit' on mortgages

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The Myrtle Beach Sun-News
By: Adva Saldinger
August 5, 2010

Carolinas homeowners facing foreclosure as a result of unemployment or other unavoidable financial problems may soon be eligible for aid through plans approved by the federal government Wednesday.

The South Carolina State Housing Finance and Development Authority was awarded $138 million and the North Carolina Housing Finance Agency was awarded $159 million to help the hardest-hit homeowners. Both states were selected for the U.S. Department of Treasury's "Hardest hit program" because they have among the highest levels of unemployment in thecountry. At 10.7 percent, South Carolina has the country's seventh-highest jobless rate, while North Carolina's 10 percent ranked 14th.

Three other states - Ohio, Oregon and Rhode Island - also had plans approved this week.

The administration is directing $2.1 billion from its $75 billion mortgage assistance program to 10 states. Each state designed its own plan. Treasury approved money in June for Arizona, California, Florida, Michigan and Nevada.

S.C. State Housing will spend the next few months developing and implementing the policies and procedures for giving out the funds, which will become available in October. The South Carolina program will be called S.C. Homeownership and Employment Lending Program and will include several measures to help homeowners. The plan will cover monthly payments for a certain period while homeowners seek employment, provide borrowers loans to help pay off what they owe once they regain the ability to pay and provide funds to create incentives for lenders to help homeowners qualify for the Home Affordable Modification Program or help sell properties through short sales when mortgage payments can't be worked out. A short sale is when the bank agrees to sell the house for less than what is owed on it.

"With the funds that we have, we're going to try to help people who we call responsible borrowers who have fallen behind on mortgage payments really through no fault of their own," said Clayton Ingram, a S.C. State Housing spokesman.

Ingram said the state estimates the program will help between 11,000 and 15,000 families, adding that the program would continue until all the money had been distributed.

"Unemployment leads to a loss of income, a loss of income can lead very quickly to falling behind on a mortgage payment," he said. "These funds are going to go a long way toward helping that."

Debbie Kidd, the director of the Homeownership Resource Center at Family Services Inc, a nonprofit that provides free counseling services, said that most of the homeowners seeking help have lost jobs. For those borrowers who qualify, the new program will be a big help, she said.

"It's going to be fantastic," Kidd said. "It's been the missing link to a lot of the foreclosure problems we've been having in the state."

She called the funding a gift but warned that not all unemployed homeowners will qualify. Borrowers will have to prove that they are eligible and were in good standing with the loan, though the exact qualifications are still being worked out, according to the state.

While the funds aren't available until October, Kidd said that homeowners who are behind on payments should not wait to act.

"You need to start today to save your house for tomorrow," she said. "Let us start negotiating with the lender ... [then] when the state announces the program then you will be first in line."
Family Services' foreclosure counseling is free and the employees are certified to help work out loan modifications or payment plans with lenders.

The North Carolina program is slightly different but most of the money will be used to help unemployed homeowners. About $115 million will go towards making mortgage payments for unemployed homeowners as they look for work or go to job training. Homeowners will qualify for up to 36 months or $36,000 in payments in the 50 counties with the highest unemployment rates and up to 24 months or $24,000 in all other counties.

Also included in the plan are two smaller programs that will reduce mortgage payments for homeowners earning lower wages either by refinancing a second mortgage or reducing mortgage principal.

The mortgage payment program will be offered in 17 counties in October and expand statewide in December. The other programs will be phased in between January and April. In all of the programs, the money is given as a no-interest loan that borrowers do not have to pay back if they continue living in the house for 10 years.

The Obama administration has rolled out numerous attempts to tackle the foreclosure crisis but has made only a small dent in the problem. More than 40 percent, or about 530,000 homeowners, have fallen out of the administration's main effort to assist those facing foreclosure. That program provides lenders with incentives to reduce mortgage payments. So far, it has provided permanent help to about 390,000 homeowners, or 30 percent of the 1.3 million who have enrolled since March 2009.

Local officials say that the programs in the Carolinas approved Wednesday should help.
The Associated Press contributed to this report.

Contact ADVA SALDINGER at 626-0317.

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