A program that has helped struggling North Carolina homeowners make their mortgage payments since the housing crisis is expected to run out of funding next year.
The North Carolina Foreclosure Prevention Fund was launched in 2010 with funding from the U.S. Treasury’s “Hardest Hit Fund” to help states battered by slumping housing prices and soaring unemployment. North Carolina was one of 18 states, plus the District of Columbia, to receive the Hardest Hit funding. States chosen for the funding had unemployment rates at or above the national average or home price declines of more than 20 percent.
Bob Kucab, executive director for the N.C. Housing Finance Agency, which administers the fund, told me the North Carolina program is on pace for all of its money to be used up around the end of next year. To date, the program has helped about 20,400 North Carolina homeowners, just shy of the 21,000 it was initially forecast to assist.
Kucab said enough funding remains to help about 3,000 more North Carolina homeowners.
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I asked him how many additional homeowners might need help once the program ends.
“It’s really hard to know, because we can only address the cases that come in to us and for people seeking assistance,” Kucab said. “We know counseling agencies are continuing to hear from households that have delinquencies that are facing foreclosure. I really couldn’t quantify what’s out there that we won’t be able to address.”
Expectations of the program nearing its end come as North Carolina’s economy has made improvements since the recession but also hasn’t completely healed.
The state’s unemployment rate was 5.9 percent in July, the latest month for which data are available.
That’s down from a peak of 11.3 percent in 2010. But it’s still above pre-recession levels and the national level in July of 5.3 percent.
Other indicators have also made improvements but have room to strengthen further.
Kucab said first-time foreclosure filings peaked in North Carolina at about 66,000 in 2010 but are returning to a more normal rate. This year, the figure is expected to be about 30,000, he said. That compares with a rate of 10,000 to 20,000 a year before the recession, he said.
“We're still at elevated levels,” he said. “Things are better, but they're not completely back to normal.”
The N.C. Foreclosure Prevention Fund was created to pay mortgages for people dealing with a job loss or some other temporary hardship, such as divorce or illness. The program has also been available to veterans struggling with mortgage payments as they try to re-enter the workforce.
Homeowners who qualify are given zero-interest loans of up to $36,000 while searching or training for a new job. If the homeowner remains in the home, the loan is forgiven at a rate of 20 percent a year starting the sixth year after it is granted and completely forgiven in 10 years.
Under a recent change to the program, Kucab said, North Carolina first-time homebuyers can receive up to $15,000 in down payment assistance in five counties: Mecklenburg, Cabarrus, Cumberland, Guilford and Johnston. The Treasury Department gave the state approval last month to use a portion of its roughly $60 million in remaining Hardest Hit funds for that purpose, he said.
“We know these counties have had significant (real estate) distress over the past few years,” he said.