South Carolina still has money to help homeowners avoid foreclosure

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COLUMBIA — More than 3,500 South Carolina families have received assistance through a federally funded program designed to help homeowners avoid foreclosure.

But the nearly $36 million distributed as of Aug. 31 represents just 12 percent of the $295.4 million awarded to South Carolina through the U.S. Treasury’s Hardest Hit Fund. An additional $18 million committed to families but not spent brings that to 18 percent.

Still, officials acknowledge participation is frustratingly low when the need is so great.

“We know there are a lot more out there who aren’t taking advantage of it,” said Clayton Ingram, the spokesman for the state Housing Finance and Development Authority, which runs the program.

The reasons range from people being too embarrassed to seek help to assuming the free, too-good-to-be-true offer is a scam, he said.

An advocate for the poor says South Carolina’s program is too limited in who it can help, while a legislator in charge of the House budget for economic development blames poor marketing.

“A lot of people don’t believe it will help them,” Ingram said. “We’re constantly telling people not to self-exclude. At least apply. The worst that can happen is you’re turned down. The best is, you’ll save your home.”

South Carolina qualified for its chunk of $7.6 billion awarded to 18 states and Washington, D.C., because of chronically high jobless rates in 2009 and 2010. July’s rate of 9.6 percent still ranks fifth-worst nationally. Nearly 4,000 properties were in foreclosure statewide in July, a 34 percent increase from a year earlier. The state’s foreclosure rate ranks ninth-worst nationwide, according to the foreclosure listing firm RealtyTrac Inc.

Through August, participating states had committed more than $1.1 billion of Hardest Hit funds, assisting more than 74,000 homeowners, with an additional 35,000 in process, said U.S. Treasury spokeswoman Andrea Risotto.

Participation continues to grow, she said.

So far, California tops the list, having helped 16,303 homeowners, followed by North Carolina (7,901), and Ohio (7,346).

States designed their own programs and launched them at different times. All must spend their allotment by December 2017. Next week, officials from participating states head to Washington for a summit on the most effective practices and to share ideas for new programs.

South Carolina opened SC HELP (Homeownership and Employment Lending Program) in January 2011.

It’s limited to homeowners who have been responsible in paying their bills but fell behind through no fault of their own, because of job loss, reduced work hours, death of a spouse, divorce or extensive medical bills. There is no limit on a family’s income, but assistance is capped at $36,000 per household.

“If you’re depending on a steady stream of income to make a home payment and all of a sudden it’s no longer there, it doesn’t take long to fall behind and eventually lose your home,” Ingram said. “It’s not a handout. It’s a bridge program and economic stabilization program.”

SC HELP provides three types of assistance. Those in arrears can get a lump sum to catch up on their mortgage payments, up to $20,000. They can combine that with monthly payment help, which is also for those who aren’t behind but soon will be. It covers payments for up to 24 months, depending on the county.

The third option is for those who are either too far behind or are unlikely to ever again afford the regular mortgage payment. It provides up to $5,000 to transition to rental property, for expenses such as moving and utility deposits.

Working with the state’s unemployment agency, the housing authority sends letters to those drawing jobless benefits to alert them of the option. Community nonprofits and banks also help get the word out.

Still, “it’s a hard population to find,” Ingram said. “It’s hard to find the people who need it, when they need it.”

The fund became part of the 2012-13 budget debate, as Republicans and Democrats fought over how to spend South Carolina’s $31 million share of the national mortgage settlement. Republicans successfully pushed to transfer $10 million of it to a Commerce Department economic development closing fund for infrastructure projects. The housing authority got none of it.

Democrats – as well as Republican Gov. Nikki Haley, whose veto was overridden – argued it’s morally wrong to send money to Commerce that’s meant to help people in foreclosure. But Republican legislators noted that SC HELP was available, and little of it had been spent. They also argued that giving the state’s share of punitive fines to Commerce would bring the jobs that homeowners need to pay mortgages.

Sue Berkowitz of Appleseed Legal Justice Center called SC HELP amazing but too limited. Housing counselors are needed to help homeowners navigate the process. Some homeowners already served with legal papers might need attorneys. Others might need help renegotiating their loan. But SC HELP can’t help with any of that, she said.

“Their hands are tied,” she said. “Lots of folks are falling through the cracks. That’s where the mortgage settlement funds could’ve been used. We as a state blew it.”

But Rep. Gary Simrill said it’s an issue of outreach, not “getting more people to help people.”

“We’re not doing the proper job to reach the people,” said Simrill, R-Rock Hill, chairman of a Ways and Means subcommittee on economic development. “People are unaware there’s help out there.”

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