Stemming the flood

Relief from foreclosures needed for working families.

By Rob Schofield

[05.24.04] — North Carolina lawmakers returned to Raleigh last week and expressed relief that the longstanding fiscal crisis had eased somewhat.

Unfortunately, despite some encouraging signs, state economic news remains extremely sobering.

Recent drops in the unemployment rate, for instance, seem to have had little effect on broader, long-term downturns in such critical areas as manufacturing employment and family income.

As incomes have fallen, mortgage foreclosures have almost tripled in five years from roughly 15,000 in 1998 to almost 45,000 last year.

One ray of hope in this dark forecast may emerge in the coming weeks. Housing and consumer advocates, and banking industry representatives, are working hard to bring forward a legislative proposal that could provide relief to thousands of working families facing foreclosure due to temporary financial hardship.

Bills to establish the N.C. Home Protection Fund could be introduced soon.

The Home Protection Fund is modeled on a 1983 Pennsylvania law that assists homeowners who are about to lose their homes due to temporary financial hardship beyond their control.

It provides temporary loan assistance to bring a loan current and may provide up to 24 months of continued mortgage payment assistance.

To date, the program has helped over 32,000 homeowners avoid foreclosure.

As in Pennsylvania, the North Carolina program would provide loans from a revolving loan fund that would be jumpstarted through a state appropriation.

All loan recipients would begin repayments immediately, with the amount due based upon income and housing expenses.

Experts estimate the program would process as many as 8,000 applicants and assist as many as 1,900 families during the first 18 months.

The proposal would also provide new support for the existing network of nonprofit housing counselors, who would channel appropriate candidates to the Home Protection Fund and assist families who may not be eligible or appropriate for new loans.

As North Carolina moves towards long-term economic recovery, it is essential to take every possible step to preserve the existing wealth and stability of families and communities.

Establishment of a Home Protection Fund would be a good place to start.

Rob Schofield is policy director of the N.C. Justice Center in Raleigh.

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