State housing program can help homeowners stem foreclosures

Home foreclosures may have dwindled since the depths of the Great Recession — but they're far from disappearing.

In the 12 months leading up to May 2014, more than 24,000 North Carolinians lost their homes to foreclosure. So far this year, close to 3,000 foreclosure notices a month have been filed in North Carolina courts — even as foreclosure rates move down towards pre-recession levels.

Fortunately, in North Carolina help is available to prevent some of these losses. The state-designed N.C. Foreclosure Prevention Fund has already helped more than 17,000 homeowners keep their homes after an unexpected job loss or hardship left them temporarily unable to make their mortgage payments. Funds are available to assist 4,000 more.

For up to 36 months ($36,000), the N.C. Foreclosure Prevention Fund makes the homeowners' payments while they look for work or train for new jobs. The effort is designed and managed by the N.C. Housing Finance Agency, a self-supporting state agency, using funds from the U.S. Department of the Treasury. Program guidelines were expanded this summer to assist returning veterans enrolled in VA vocational training or attending school on the GI Bill.

To qualify, homeowners do not need to be behind on mortgage payments to apply.

Assistance is provided through a zero-interest, deferred loan, with no payments due as long as the homeowners continue to live in their home. If the owner remains in the home 10 years, the loan is forgiven. The fund makes the mortgage payments directly to the lender and also pays mortgage related-expenses such as property taxes, insurance and homeowners association dues.

"The goal is to help responsible homeowners protect their homes while they get back on their feet," explained A. Robert Kucab, executive director of the N.C. Housing Finance Agency. "Every foreclosure we can prevent helps the state's economic recovery by preserving property values and the local tax base."

Kucab estimates that a single completed foreclosure costs the economy between $75,000 to $100,000 in lost taxes, commercial revenue and depreciated property value. ["Sheltering Neighborhoods from the Subprime Foreclosure Storm," U.S. Congressional Joint Economic Committee Special Report, April 2007] Since October 2010, when the N.C. Foreclosure Prevention Fund was launched, the program has saved more than $2.3 billion in property value from foreclosure — and protected an additional $642 million in surrounding property value from potential depreciation.

The program is funded by the U.S. Department of the Treasury as part of the "Hardest Hit Fund" created at the height of the recession. North Carolina was one of 18 states, and the District of Columbia, chosen for this assistance in 2010 because of the state's high unemployment rate and declining home prices.

Homeowners can apply for the fund through any of 41 HUD-approved housing finance agencies throughout the state, listed on the Fund's website (NCForeclosurePrevention.gov) or apply online through the website.

How well has the program worked?

Of the 17,000 homeowners who have received loans since 2010, more than 12,000 have completed the program and resumed their own mortgage payments. Of those, fewer than 2 percent have experienced foreclosure.

For more information about the N.C. Foreclosure Prevention Fund, homeowners may contact a participating housing counseling agency, visit NCForeclosurePrevention.gov or call (888) 623-8631.