Kicked out

Foreclosure filings in North Carolina triple over six years.

By Ret Boney

RALEIGH, N.C. [05.18.04] – Foreclosure filings in North Carolina have nearly tripled in last six years, prompting housing advocates to push for a plan to help struggling workers save their homes.

Filings are up from 15,282 in 1998 to 44,211 in 2003, with the trend continuing this year, says the North Carolina Justice Center, a nonprofit that works on behalf of poor people and communities.

Advocated say that when people lose their homes, they lose wealth and many lose hope.

When lawmakers convene this month, social-justice advocates plan to push for a law to help them.

Advocates have yet to confirm a lawmaker to sponsor the plan, which will ask for $7.5 million the first year.

“There are a lot of people suffering in North Carolina right now, so the sooner we can help, the better,” says Al Ripley, legal counsel for housing affairs for the Justice Center and director of the Consumer Action Network.

The proposed plan mirrors one created in Pennsylvania in 1983 that has helped save over 31,000 homeowners from foreclosure.

The Pennsylvania fund has been self-supporting, using loan repayments, for the past six years.

Advocates are backing creation of a North Carolina Home Protection Fund to establish a source of loan dollars to help qualified homeowners facing foreclosure pay their mortgages.

Mortgage lenders can file for foreclosure if a borrower is more than 90 days late in making payments, triggering the process of selling the borrower’s home to settle the debt.

Job losses in the manufacturing sector are a major driver of the sharp increase in filings says Ripley.

Manufacturing companies in the state have cut 217,000 jobs over the past six years, down nearly 27 percent, says the North Carolina Budget and Tax Center, a program of the Justice Center.

While some of these people are able to find other jobs, they often pay less, while mortgage payments stay the same.

More than 5,000 workers lost their jobs, for example, as a result of the closing last summer of Pillowtex, a Kannapolis-based textile maker.

As benefits begin running out, advocates say, the financial situation worsens and mortgage payments lapse.

To save their homes, an increasing number of former Pillowtex workers are seeking assistance, says Beth Bebber, a consumer attorney with Legal Services of Southern Piedmont in Charlotte, a group that provides free legal assistance to low-income people.

“We’re now turning away foreclosure cases in this office,” she says.

Ripley also blames rising foreclosure filings on predatory lending practices, which he defines as loans priced significantly above prime rates, with high up-front fees, and abusive loan-servicing practices, including charging fees for unnecessary services.

Loans from the proposed North Carolina Home Protection Fund would be used to bring mortgage payments up to date and continue covering them for up to two years, with a maximum loan amount of $50,000.

To qualify, says Ripley, homeowners would have to meet several requirements.

Most importantly, he says, homeowners would have to show that their financial difficulties were not their fault but resulted from something like a layoff or illness, while also showing they had “reasonable prospects” of being able to resume mortgage payments after two years.

The loan fund should require fewer state dollars each year, says Ripley, and is designed to become self-funding within 10 years, using loan repayments to replenish the fund.

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