GREENSBORO, N.C. — More than 20,000 North Carolina borrowers who were hit by a hardship could be eligible for federal funds to help with their mortgage payments. While the program is targeted at unemployed borrowers, other potential beneficiaries include borrowers who were recently divorced or separated.
The federally funded program could help as many as 21,000 North Carolina homeowners who have lost their jobs keep their homes.
The anti-foreclosure assistance became available statewide Wednesday.
The program, which comes under the N.C. Foreclosure Prevention Fund, allows eligible homeowners to receive up to $36,000 in mortgage payments while they seek employment or complete job training. Residents in counties with lower unemployment rates could receive up to $24,000.
The N.C. Housing Finance Agency developed the fund using money from the U.S. Department of the Treasury’s Hardest Hit Fund.
In August, North Carolina was one of five states approved to use $600 million from the federal fund. These states were selected because of the large percentage of their populations living in counties with high unemployment in 2009.
The N.C. Housing Finance Agency plans to use about $115 million of the state’s $159 million allotment to roll out this mortgage payment program.
The program is for those who missed payments through no fault of their own because of temporary hardship occurring on or after Jan. 1, 2008. Applicants must show proof of their job search or training while they receive assistance.
“This is really an investment of success and we want to make sure it gets into the hands of the right people,” said Bob Kucab, executive director of the N.C. Housing Finance Agency.
An estimated 21,000 households could be affected over the next three to five years, he said.
“The program … is going to provide a bridge for their loss of a job and their new job,” he said. “And it’s going to ensure that their mortgage is paid and they can stay in their homes.”
Homeowners will apply through participating local HUD-approved counseling agencies. The services are free.
The Consumer Credit Counseling Service of Greater Greensboro is helping residents in six counties: Alamance, Caswell, Davidson, Guilford, Randolph and Rockingham.
Sarah Hutchinson, the program director for consumer credit counseling, has been leading information clinics for potential candidates since Wednesday. She provides information on a bevy of resources available — not just the new program.
After the sessions, clients can find out if they are eligible for the mortgage payment program. Then, they can set up an appointment with credit counselors to take further action.
The new foreclosure prevention plan can help a broader audience than previous initiatives, Hutchinson said.
They mainly focused on income lost due to unemployment or underemployment, she said. The new mortgage payment system also considers divorce, legal separation, serious illness and death.
“This program has so many different options. The clients who I saw (Thursday and Wednesday), they are very excited about this program and they are willing to provide any information that’s necessary, so we can get started,” Hutchinson said.
Since the program was started in 17 counties in October, about 500 applications have been moved through the pipeline, Kucab said.
Hutchinson said the local agency is pushing about 125 applications through.
Some of those homeowners were ineligible for other assistance but still need the help. The number of people requesting mortgage assistance has increased greatly in the past few years, she said.
In 2009, a quarter of the state’s population lived in a county with an unemployment rate of 12 percent or higher, compared with 15 percent of the national population. That is why the housing finance agency is focusing on relief for homeowners who have suffered job loss or loss of income.
Half of the state’s 100 counties had an unemployment rate of 12 percent or higher.
While the new loans will be available statewide, homeowners in 50 targeted counties will be eligible for additional help.
Rockingham, Randolph and Alamance counties are local targeted areas. Forsyth and Guilford counties are not, thus qualifying for smaller loans.
Maximum loan amounts are up to 36 months of mortgage payments of up to $36,000 total in targeted counties, where it may take longer to find a new job. Maximum loans for nontargeted counties are 24 months of mortgage payments up to $24,000.
The assistance is provided as a zero-interest loan that is forgiven over 10 years, as long as the owner continues to live in the home.
The housing finance agency plans to use the remaining $44 million from the $159 million to phase in other Hardest Hit programs in 2011, Kucab said. These programs will focus on refinancing high-cost second mortgages and reducing the principal on unaffordable first mortgages.
